Dr. Conor O'Toole:

I will add a point on SME investment. We have done much work over the past years in the ESRI, trying to think about these issues. One thing that is clear, as Dr. Kelly has said, is that Irish firms are not demanding credit at levels we expect, either in comparison with other European countries or those they had the past. Our big question is why that is the case. This credit hesitancy has a potential impact on investment activity which leads to long-term productivity growth, which is the good stuff we need to grow our economy in the long run. It is an important question.

A couple of things have come out of the previous surveys we have published. One is the uncertainty factor. The world has become uncertain and many firms do not want to make big capital expenditure decisions in a world that is hit by repeated shocks. That has held many companies back. There is another factor we need to think a little differently about, which is about historical credit levels and the types of firms that might have operated in a more manufacturing-based economy. In a knowledge-based economy with more service firms, their credit requirements are potentially different because the capital they use is different. They do not necessarily need bigger machines or such. It may be that the investment or credit requirements relative to output are different. There is a range of factors which explain this investment hesitancy and self-financing and keeping the demand side down for enterprises.