Gallagher calls for full potential of European Investment Bank to be realised

Fianna Fáil MEP Pat the Cope Gallagher has called for a major overhaul of the mandate of the European Investment Bank to ensure that it can address unmet credit needs among Irish small and medium enterprises.

“It is my view that the full potential of European Investment Bank support for the Irish economy is not being realised,” the Midlands-North West candidate said.

“Total funding from the European Investment Bank for projects in Ireland increased in 2013 but was still 30% below the level achieved in 2009.  It has been widely recognised that the new head of the EIB has taken a much broader view of its role in supporting economic activity in the EU. However the range of projects it supports and the time between approval of a project and its completion needs to be improved.

“Given the significant difficulties many firms have in raising finance at competitive rates, initiatives such as providing funding for SME loans is a practical example of how the EIB can support jobs.  A recent report from PwC indicated that the shortfall in European SME banking credit will last for at least five years. This is an unacceptable situation and it demands an immediate policy response at European level.

“In the past four years the European Investment Bank has provided €350m in loans to Irish small and medium enterprises through AIB. While this is welcome, it only goes a small way towards dealing with the reduction in supply of credit to the market that the Irish banks themselves have presided over. Given the need for credit that many businesses have there is scope for this level of activity to be expanded significantly. This should begin with an overhaul of the lending criteria that the EIB applies. Last year a review was conducted on EIB lending to the energy sector. A similar exercise is now needed in respect of SMEs.

“Efforts by the Government to encourage non-bank funding have been completely inadequate to date. High profile announcements around seed capital, loan guarantees and microfinance have not been matched by delivery of funding. This once again brings in to focus the need for a State the backed Enterprise Bank as a means of addressing the permanent funding gap in the banking sector. This was a commitment in the Programme for Government but has not been delivered.

“The European Investment Bank could be key partner for an Irish State Enterprise Bank in ensuring that businesses have the working capital and medium term finance they need to be able to succeed in the current economic environment.”