Bermuda's economy is vulnerable to recession in the US, according to a Financial Times survey of the Isand published last Friday.

"Although the insurance and reinsurance industries tend to fare relatively well in economic downturns, a substantial slowdown in the US economy would certainly not leave Bermuda's thriving financial community unscathed,'' it states.

Although the FT found the island's insurers well placed to benefit from a hardening market, it feels expansion through acquisition of some of the larger insurers could mean they may suffer from a downturn in the US.

But it goes on to say that any significant US economic reverse could have a much more serious impact on "Bermuda's already embattled tourism trade''. The US market supplies 84 percent of total visitors to the island and 93 percent of its cruise ship visitors. The survey says that "the island's value for money and standards of service for tourists remain questionable,'' and that during the 1991-1992 recession visitor spending fell by 8.5 percent.

The economy has been showing steady growth, above its ten-year trend rate of 2.8 percent. The increase in world oil prices has pushed up inflation in the island and the survey says, "As a small open economy without significant domestic production, Bermuda is susceptible to the effect foreign inflation has on imported goods.'' The FT said the UBP has traditionally been seen as the party of white Bermudians, with the PLP's support coming from black Bermudians. However it sees a slow change in perception of the two parties. The survey said, "Race based support has given way to more objective assessments of the PLP now that it is in government and the UBP in opposition.'' It describes the business sector's acceptance of the PLP as a major change, although it was worried at the party's election. Barry Shailer, chief compliance officer at Bank of Bermuda, is quoted as saying, "The government and the business sector are seeing eye to eye. A partnership has developed and the relationship is good.'' Premier Jennifer Smith is described as confident the PLP will win a second term and opposition leader Pamela Gordon is less sure of her party regaining office in the near future.

The survey also examines the island's constitutional status. It said: "Independence is a simmering issue that most Bermudians believe must be addressed. Supporters contend that it is not a question of `if' but `when,' while those wanting to retain the status quo argue that the nation will suffer if it cuts its links with the UK.'' It said the PLP did not make independence an election issue and is not rushing to make it an issue now. Ms Smith is quoted as saying: "We stated clearly that independence was never going to be an issue in our first term in office.

In the first term our focus is to improve the quality of life for Bermudians.

Independence will come later.'' But the survey team found some disquiet among the tourism and business sectors about the prospect of independence. Mr. Shailer is again quoted, "Many people who do business with Bermuda see the British flag in the background as something positive,'' he said.

Social Division The FT survey tackled the perceived black/white social divide head on. "Black Bermudians, who make up 60 percent of the population, have long felt that they were being left out of the economy, and that most of the benefits of the island's economic success were being consumed by whites,'' the survey said.

It said the Island is preoccupied with the debate over relevant employment issues and the granting of work permits for, usually white, expatriates, but there is a more open approach now to issues of race and employment.

Premier Smith is quoted as saying, "Bermuda has not yet dealt with the issue of racism. this is a country that in 1968 had legal segregation on the basis of race.'' Calum Johnston, chief executive officer of the Bank of Butterfield, said young black Bermudian men feel let down by the education system. "They come out of school seeking a place in the community, and then get frustrated when they cannot find one. This is one problem that needs attention. We have lost almost a generation and it is a problem that is difficult to correct.'' The FT said concerns about disenfranchisement have exposed latent but deep worries about relations between black and white Bermudians. The survey examines the Cure legislation but said "the government's investigation into the employment of black Bermudians has met with objections from the international business community.'' It said businesses were concerned they will be forced to employ more black staff, regardless of qualifications.

One unnamed senior insurance executive is quoted as saying, "We do not object to the aims of Cure and the business sector is working with the government to see how many more Bermudians can be involved. But even the government admits there are not enough black Bermudians with the right qualifications to take on these jobs.'' BUSINESS BUC