SFA CALLS FOR LOAN GUARANTEE SCHEME - It is still a pretty torrid time for many small businesses around the country, if retail spending and consumer sentiment figures are anything to go by. The Small Firms Association will gather in Dublin city centre later this morning to discuss what can be done for its members to help them weather the current economic troubles.
The Small Firm's Association chairman Doctor Aidan O'Boyle says small viable firms are lacking two things when they look for credit from a bank - collateral due to the bursting of the property bubble and a track record over the past two or three years due to poor consumer spending and the economic downturn. He says the SFA wants to see a Government-backed loan guarantee scheme introduced, similar to one in operation in Chile. This would underpin the risk of the loan and would only be available to viable businesses and would not be a case of 'giving money away'. Dr O'Boyle also wants to see banks going back to 'relationship banking' and back to helping small business create jobs in this economy.
On costs, the SFA Chairman says that Ireland is still about 20% out of line with its European competitors. He urged the Government to look at energy costs and says small firms will not be helped by the 5% increase in electricity prices when the new levy comes into effect next month. He states that 'jobs should take priority over the green agenda' and adds that he does not apologise for that view.
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MORNING BRIEFS - The yield on 10-year Irish Government bonds this morning shows little sign of coming back in. The yield is the interest rate being demanded by investors. A short time ago in very early trading, that interest rate rose to 6.02% for those 10-year bonds. It had hit a high of 6.1% last week. The rate had fallen after the Government announcement on its plans to split up Anglo Irish Bank. But it seems that Irish bonds still remain under severe pressure. France and Spain are due to issue around €15 billion in fresh debt later today.
*** The Department of Finance - it seems - has finally got some formal retaliation in against that scathing editorial carried by the Financial Times earlier in the week. The newspaper had claimed that the Government was trying to bring Anglo Irish Bank 'Lazarus-like', back to life. It also claimed that some of the cost of Anglo should fall on the unsecured creditors and not the Irish taxpayer. The newspaper carries a short letter from Mr Eoin Dorgan of the Department of Finance press office this morning. He writes, that the editorial was not in accordance with the facts. He also points out that the Government intends to work out the Anglo loan book over time and that the FT got its figures wrong when reporting on the balance sheet of the six domestically owned Irish banks.
*** Greece is continuing with its investment road-show, after it told investors yesterday that it would not be contemplating any sort of debt restructuring. The country's finance minister George Papaconstantinou said that any sort of default would put intolerable pressure on countries such as Ireland and Portugal and would effectively break the euro zone.
*** On the currency markets, the euro is worth $1.2980 and 83.2 pence sterling.
