Credit pull back ‘cannot last’ without damage

Outstanding loans to businesses and for households to buy homes has continued to contract, prompting a leading economist to question whether the economy can prosper without more credit.

Central Bank figures showed that net lending to Irish businesses had fallen by the end of May by €1.7bn on an annual basis.

And net mortgage lending contracted by €458m in the year, as more people paid down their home loans at a faster pace than the banks had advanced new mortgages.