Govt washes its hands of SMEs as economy starved of credit

Small BusinessFianna Fáil Jobs Spokesperson Dara Calleary has accused the Government of washing its
hands of SMEs as new figures show the economy is being starved of
credit.

The figures from the Central Bank show that lending to SMEs
dropped by 6.2% last year.  Gross new lending to SMEs amounted to €1.9billion.
The outstanding amount of credit advanced to SMEs dropped by 5.5% last year,
while SME non-financial credit fell by 5.1%.

“These figures show across the board reductions in all types of credit available to SMEs in all sectors last year.  It’s clear that the credit crisis is deepening, with banks
restricting the working capital available to viable businesses and the
Government unwilling to intervene,” said Deputy Calleary.

“The Finance Minister Richard Bruton appears to have washed his hands of this entirely.
Despite the further reduction in the availability of credit last year, the
Government has seen no need to crack down on the two pillar banks and impose any
lending targets this year.  While the targets over the past two years did not
improve the situation, I fear the absence of any targets this year allows both
Government and the banks to take their eye off the ball entirely.

“It is very clear from these figures that banks are restricting credit.  But we remain
very much in the dark as to why working capital is being denied to those
businesses and entrepreneurs who need it and should qualify for it.  It seems
the entire focus of our pillar banks is on reducing their balance sheet,
preserving capital and minimising risk.  If that remains the case, it will hold
back Ireland’s recovery.

“It is not good enough for the Finance Minister Michael Noonan and Jobs Minister Richard Bruton to wash their hands of this entirely and allow banks to call all the shots, as viable SMEs are prevented
from expanding and creating jobs. There is clearly an ongoing credit crisis in
this country and the Government must use its teeth to tackle it.”