marion williams : regional growth of accounting and other service firms address by dr marion williams, governor of the central bank of barbados, at the launch of the new deloitte ( barbados ), st. james, 12 may 2005. * * * good evening, ladies and gentlemen. i wish first to congratulate toppin, walker and deloitte for achieving this milestone, that of combining to establish the new firm deloitte ( barbados ). it is a remarkable achievement which needs to be celebrated. such accomplishments are the result of hard work, application and the ability to grasp opportunities when they arise. this evening i plan to look at the need for firms in barbados and the region to look outside their domestic markets and to venture further afield. in times where the world is going global, it is timely that there is a renewed call for firms to position themselves for greater interaction in the regional and global environment. i will look especially at accounting firms. within the last three years, legislators in various jurisdictions have embarked on changes to the accounting environment to make auditors of publicly quoted companies more responsible for financial statements and have sought to separate audit from other professional services. the most famous initiative is the sarbanes oxley act in the usa, which provides for greater regulatory oversight of public companies and restricts the types of services auditors can provide to such companies. as a result, audit firms can no longer provide accounting, internal audit, it consultancy and secretarial services to their clients. in our local environment this has resulted in a reordering and restructuring of several audit firms. in addition, other developments in the offshore sector have resulted in changes in audit firms activities. generally changes bring opportunities. in this case, it has offered an opportunity for the establishment of deloitte barbados. change is universal and is increasingly evident in every form of activity. increasingly, non - local factors are important for maintaining firm profitability, for supporting local industries and for ensuring national competitiveness. consequently, every enterprise stretching from fast food outlets to clothing manufacturers has to deal with new forms of competition and a new economic framework. and this is not confined to regional market entrants. more and more, new and global competitors are entering regional markets and, hence, increasing the intensity of competition for and among established regional companies. it is for this reason that networking among firms, including accounting firms, is very important. it establishes opportunities and provides platforms for future growth. we promote ourselves as a financial services sector

particularly troubling is the unusually high level of long - term unemployment : more than 40 percent of the unemployed have been jobless for more than six months, roughly double the fraction during the economic expansion of the previous decade. uncertain job prospects, along with tight mortgage credit conditions, continue to hold back the demand for housing. although low interest rates on conventional mortgages and the drop in home prices in recent years have greatly improved the affordability of housing, both residential sales and construction remain depressed. a persistent excess supply of vacant homes, largely stemming from foreclosures, is keeping downward pressure on prices and limiting the demand for new construction. in contrast to the household sector, the business sector has been a relative bright spot in the current recovery. manufacturing production has increased 15 percent since its trough, and capital spending by businesses has expanded briskly over the past two years, driven in part by the need to replace aging equipment and software. moreover, many u. s. firms, notably in bis central bankers ’ speeches manufacturing but also in services, have benefited from strong demand from foreign markets over the past few years. more recently, the pace of growth in business investment has slowed, likely reflecting concerns about both the domestic outlook and developments in europe. however, there are signs that these concerns are abating somewhat. if business confidence continues to improve, u. s. firms should be well positioned to increase both capital spending and hiring : larger businesses are still able to obtain credit at historically low interest rates, and corporate balance sheets are strong. and, though many smaller businesses continue to face difficulties in obtaining credit, surveys indicate that credit conditions have begun to improve modestly for those firms as well. globally, economic activity appears to be slowing, restrained in part by spillovers from fiscal and financial developments in europe. the combination of high debt levels and weak growth prospects in a number of european countries has raised significant concerns about their fiscal situations, leading to substantial increases in sovereign borrowing costs, concerns about the health of european banks, and associated reductions in confidence and the availability of credit in the euro area. resolving these problems will require concerted action on the part of european authorities. they are working hard to address their fiscal and financial challenges. nonetheless, risks remain that developments in europe or elsewhere may unfold unfavorably and could worsen economic prospects here at home. we are in frequent contact with european authorities, and we will continue to monitor the situation closely and take every available step to protect the u