Kieran O'Donnell (Limerick East, Fine Gael)

I am sharing my time with Deputy Neville. Credit is not flowing to the SME sector and the real economy. The Central Bank has indicated that private sector credit contracted by €12 billion in the 12 months to February 2010. The three Mazars reports have consistently revealed a contraction in the credit supply to the SME sector. Performing SME loans have contracted by 25%, which reveals that the banks are squeezing viable small businesses.

The Labour Party proposes the establishment of a strategic investment bank which would provide credit to the real economy. Fine Gael has consistently put forward the parallel approach of a national recovery bank alongside the NewERA strategy to provide vital broadband, energy and water infrastructure. The Government has yet to receive from the two main banks their plans on how to supply €3 billion to the real economy. On today's Question Time, the Minister for Finance stated that he expects this money to be provided primarily towards working capital. We need to implement a mechanism that ensures credit goes to the SME sector. The credit review office established under Mr. John Trethowen must not allow inordinate delays in getting credit. A jobs strategy is also urgently needed to accompany the flow of credit from banks.

The jobs, banking and fiscal crises that we face are interlinked. The markets' response to Greece sends the message that liquidity issues may be resolved for eurozone countries but questions of solvency continue to arise. In the past week, the Irish bonds spread rose by 100 basis points. Today, the yield was 5.5% and the spread with German bonds was 240 basis points. The Minister needs to give an unequivocal statement on how he intends to maintain fiscal rectitude in 2011. Greek bonds were downgraded yesterday and Spanish bonds followed suit today. We need certainty in this area.

I ask the Minister to outline to the House how he will ensure credit flows to the SME sector in return for the €3 billion that has been provided to AIB and Bank of Ireland, in respect of which plans will not be available until 21 May. I would also like to learn the jobs strategy he will put in place to deal with the recession on a positive note. The ESRI and other commentators have stated that more than half of our general government deficit is the result of unemployment but the Government has left that key component out of the equation.

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