John Minihan (Progressive Democrats)

I welcome the Minister of State to the House and I thank the Leader for facilitating this debate. As previous speakers said, it is very simple for people to remain quiet on this issue and hope that the banks can get away with the actions of recent days. We welcome the concerted effort by the Government in highlighting this issue and bringing to bear some moral authority on the banks. Statements such as those made in this House help to add to that campaign to make the banks face up to their responsibilities. The recent ECB cut must be welcomed. It will give a major stimulus to enterprise and investment across the euro zone. That is badly needed, because the euro zone economy is effectively stalled.

The economic situation in the major Euro zone countries is currently quite depressing. I will put the figures on the record of the House. In France, growth this year will stand at 1%, while unemployment is over 9%. In Italy, growth for 2003 will be less than 1%, with unemployment over 9%. Most worrying of all is Germany, where growth this year is anticipated at 0.2%, while unemployment is over 11%.

The reduction in interest rates should boost business confidence, and will help to stimulate job creation through new investment. It will also help to stall the upward movement of the euro, which has severely eroded the competitiveness of exports from the euro zone to the outside countries. The ECB rate cut is positive in this sense, and we must also consider the implications for the Irish economy. We will, however, lose the positive benefits if the lending institutions do not pass on the rate cut to the customers. The Government has no power to direct the banks to do so, but the moral initiative being taken by the Government in the statements of recent days, and this debate which has been facilitated by the Leader, should help bring the institutions to their senses on this issue.

Banks do well out of the Irish economy. They enjoy good margins and earn hefty profits. I urge them to look at the long-term picture rather than at short-term issues. I will give an example of what the benefits for the institutions would be in stalling any decision to pass on the cuts. One third of total lending in this country is accounted for by mortgages. That accounts for €46 billion. If that figure is divided by 0.5%, it works out at €230 million per annum. If the latter is divided by 365 days, it rounds off to €630,000 per day. Therefore, for each day that the banks delay passing on the cut, their profits are increased by €630,000. One can see the sense on the part of the banks in delaying passing on any such cut to consumers.