Joe Sherlock (Cork East, Labour)
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Question 90: To ask the Minister for Finance the most recent figures on private sector debt; and his views on the implications of this debt level for the economy. [39239/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The most recent figures available for the growth in total private-sector credit (PSC) show it grew by 28.1 percent in September, which represents a slight easing in the rate of credit growth over the past number of months. Adjusted mortgage credit growth was 26.9 per cent in September. House mortgage finance comprises the bulk of lending to households and represents approximately 83 per cent of the outstanding stock of personal debt.

In terms of the economic implications, the relatively high level of private sector indebtedness must be seen in the context of a sharp decline in public sector indebtedness in recent years. Moreover, a large part of the increase in private sector indebtedness reflects the accumulation of housing assets on the part of households.

However, as I have pointed out before, both borrowers and lenders need to be aware that interest rates are currently low and will inevitably rise. Moreover, a shock to the economy which affected employment and earnings growth could affect the ability of borrowers to service their debt. As Ireland is a small and very open economy, and hence vulnerable to changes in the global environment, this highlights the need to retain and indeed improve our international cost competitiveness. It also illustrates the need for fiscal prudence, in order to provide room for manoeuvre in the event of a shock transpiring.

As far as looking after the interests of the individual borrower and the individual investor is concerned, the function of Government is to provide an appropriate legislative framework for regulation of the financial services sector — one that is both comprehensive and robust. As the Deputy will be aware, within the implementation of the overall legislative framework, private sector credit growth and debt levels are, in the first instance, a matter for the Central Bank and Financial Services Authority of Ireland. This follows from its role as part of the European System of Central Banks and its functions, as the Financial Regulator, in relation to the prudential supervision of financial institutions and the protection of the customers of those firms. In this regard, I fully support the vigilance of the Central Bank and the Financial Regulator on the issue of personal credit and mortgage debt and in reminding both borrowers and lenders of the need for responsible behaviour.