Banks need to provide credit flow to small and medium enterprises
Issued : Saturday 28 March, 2009
Statement by Joe Costello TD
Minister of State at the Department of Foreign Affairs and Trade with responsibility for Trade and Development
Irresponsible banking has contributed enormously to the present domestic and global crisis.
For years the banks splurged like drunken sailors. Now they refuse to lend money at all even though they have been guaranteed to the tune of €500 Billion by the Irish taxpayer and have received an injection of €7.5 billion with possibly more to come.
Small and medium businesses are being hardest hit by this new credit crunch. Almost one million people constituting 64% of the private sector workforce or 50% of the entire workforce are employed by small and medium businesses.
Small and medium enterprises are the life blood of the economy yet the banks are simply refusing to provide them with the credit flow they need to keep their businesses operating efficiently.
The EU recognised the importance of this sector to the economies of the 27 Member States. At the autumn Summit in October 2008 the EU decided to make €30 billion available to the Member States through the European Investment Bank for the very purpose of ensuring that small and medium enterprises were not damaged by the credit crunch but had access to a reliable credit flow.
However, six months later, the Irish Banks, have still not drawn down one euro of that money.
That is an absolute disgrace as small and medium enterprises are crying out for money and are haemorrhaging jobs as a result.
The Government and Minister for Finance have failed to put pressure on the major Banks and it is only now after a sustained campaign by the Irish Small and Medium Enterprises (ISME) that they have sought a meagre €300 million from the €30 billion fund to be drawn down over the next 18 months.
The Government can no longer allow the private banking system to determine the future of a nation's economy and thereby the well being of its citizens.
It is time for the Government to create a State Investment Bank as was the role of the ACC and ICC in the past. It should be the vehicle whereby the Government ensures that there is a constant flow of funds to the key business and job creating sectors of the economy. It should be the sector which liaises with the European Central Bank, the European Investment Bank and the European Development and Reconstruction Bank.
The newly nationalised Anglo-Irish Bank should now become the financial institution tasked with protecting the key employment pillars of our economy.
It must first be cleared of its toxic debts, then confirmed in State ownership, and of course, given a new name in keeping with its new role.
contact Joe Costello at 087 245 0777
www.labour.ien/press
