Business Irish

Sunday 4 December 2016

Government can tap cheap credit to finance investment, says thinktank

Published 11/08/2015 | 02:30

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The Government should be tapping into cheap credit to finance long-term strategic investment, a think tank has said.

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The trade union-funded Nevin Economic Research Institute has argued that the level of public capital spending is too low.

At just 1.9pc of the total value of the economy last year, Ireland's level of public capital spending ranks among the lowest in Europe, beaten only by Cyprus, said Nevin director Tom Healy.

Spending

He said Ireland needs to reach a long-term public capital spending target of around 4pc of gross domestic product.

"With improving public finances and some limited fiscal space, there is an opportunity for the public authorities in Ireland to avail of cheap credit to finance long-term strategic investment," Mr Healy said.

"However, this needs to be undertaken in a careful and measured way."

The argument for more public investment spending is also shared by the country's largest business body, Ibec.

It said in its pre-Budget submission that the Government needs to spend an extra €1bn next year on investment.

Nevin argued that by 2011 Ireland had the lowest level of investment as a percentage of GDP of any EU state, with the public and private sectors deleveraging in tandem as a result of the crisis.

Recovery

Public investment projects shelved during the crash include the Metro North and Dart Underground.

"While there has been some recovery in investment activities since 2011, it is clear that there are acute shortages in areas of key need," Mr Healy said.

"These include the provision of suitable and affordable accommodation for a rising population as well as investment in areas such as renewable energy, building conservation measures, public transport, broadband and water infrastructure."

Irish Independent

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