BERMUDA—A listless economy has meant $150 million trimmed fromBermuda’s budget, but a brighter outlook is expected later thisyear, according to Bermuda and U.S. officials.

“Clearly, the economy is sluggish, particularly on the tourismside,” said Bermuda Premier and Minister of Finance Paula A. Coxduring a panel discussion at the seventh annual Bermuda CaptiveConference. A slowdown of hotel projects has contributed to theslow recovery, she added.

Grace W. Shelton, U.S. Consul General, also on the panel, saidthe lull in the U.S. economy is lasting longer than expected. Sheadded, however, that it “looks like the U.S. economy will gatherspeed in the second half of 2011.”

The U.S. and Bermuda have a very good relationship, Sheltonsaid, noting that she meets on a regular basis with Cox, Bermudabusiness leaders, and leaders in science, education and otherareas. The close relationship, which goes back centuries, continuesno matter what party is in power in the U.S. or Bermuda, shesaid.

Asked if she plays a role in protecting U.S. business interestin Bermuda, Ms. Shelton said, “The answer is yes. Around the world,U.S. embassies and consulates engage in commercial diplomacy. Weseek to protect U.S. interests. When I came to Bermuda, I startedmeeting with business leaders and I continue to do so.”

In each case, she said, she asks how things are going and ifthere is a role she can play. “They all respond that they have avery good dialogue with Premier Cox and her government and thatthere is openness and a willingness to discuss issues,” shesaid.

The U.S. government, she explained, is interested in promotingtransparency and a level playing field, working with thegovernment of Bermuda "as they deal with any possible shadyfinancial dealings and in working on anti-money laundering,” sheexplained.

Jeremy Cox, CEO of the Bermuda Monetary Authority, noted thatrecently, when the European contingent was in Bermuda to examineits supervision over the insurance sector—part of Bermuda’s effortto gain equivalency to Solvency II—“one of the things we weretrying to stress to them is that from a captive perspective, theU.S. is the most important market to Bermuda,” he said.

He added that 65-70 percent of Bermuda’s captive businessemanates from the U.S.