09 November 2018 Press Release
- Irish economy currently experiencing sustained expansion phase
- There can be sudden and sizeable adverse shifts in fundamentals, especially for small and highly open economies
- New Central Bank strategic plan sets out five thematic priorities for next three years
Speaking at the Dublin Chamber of Commerce Governor of the Central Bank of Ireland, Philip R. Lane discussed the importance of the enterprise sector to economic performance.
In his address he said that ‘economic success depends on a thriving enterprise sector: the employment, investment and innovation decisions made by the over two hundred thousand private sector firms active in Ireland are critically important in determining national economic performance. In addition, the behaviour of firms also has a wider impact in terms of making progress in meeting the country’s social, environmental and regional objectives.’
While noting that the economy is currently in an expanded expansion phase he warned that the Irish economy is intrinsically volatile. There can be sudden and sizeable adverse shifts in fundamentals, especially for small and highly open economies including changes in international conditions, disorderly Brexit scenarios, shifts in international trade or domestic policy errors that add to pro-cyclical dynamics in the economy.
He also discussed the financing of the business sector and the increase in new bank lending to SMEs outside of the financial and property-related sectors, which rose from €1.9 billion in 2013 to €3.7 billion in 2017. He said, ‘while the availability and volume of SME finance have improved over the last five years, the cost of bank lending for smaller firms in Ireland remains high relative to peers elsewhere in the euro area’.
He added, ‘the crisis saw the exit of a number of banks from the Irish market: the maintenance of the post-crisis recovery and the cleaning up of legacy debts are preconditions for the entry of new lenders into the Irish market’.
He concluded by outlining the new Central Bank Strategic Plan which will be launched later today. The plan identifies five thematic priorities for the Bank:
- Strengthening resilience;
- Strengthening consumer protection;
- Engaging and influencing; and
- Enhancing organisation capability.