Credit conditions for Irish SMEs 'worst in euro area'

The Governor of the Central Bank has sadi that the lack of bank credit in Ireland is likely to become a serious drag on our recovery.

The Governor of the Central Bank has today said that the lack of bank credit in Ireland is likely to become a serious drag on our recovery.

Patrick Honohan was speaking at a Central Bank conference on lending in the SME sector, which has heard that the lending market for businesses is highly concentrated, and is likely to become even more so, making it even more difficult for businesses to get credit in the future.

The Department of Finance has ordered AIB and Bank of Ireland to lend €15bn to SMEs over the next two years.

Banks claim that they already are lending money, but demand is falling.

Governor Honohan said that when it comes to the availability of credit for businesses in Ireland, the picture is less than favourable.

"Credit conditions for SMEs are tougher in Ireland than anywhere else in the euro area, bit in terms of cost and availability,"

"In such circumstances there have, of course, been a large number of small firms who cannot get credit because, on any assessment, they are not credit worthy

"But the research report in this conference strongly suggests that the credit constraints go beyond that."