Restricted lending risks damaging economy

RESTRICTED lending by banks could prevent Irish businesses expanding and damage the long-term potential of the economy.

In his latest analysis, economist Rossa White of Davy Stockbrokers, has predicted the economy is likely to be in recession for the next two years and not just in 2008 as other forecasters predicted.

Cash flow has slowed to a trickle as sales of new homes, cars and durable goods continues to fall as the economy slows dramatically. The slowdown has been reinforced by reduced access to credit while growing risk aversion has seen funds moved to deposits with a longer maturity.