Ireland 'needs new state-owned bank'
Ireland needs a new publicly owned bank modelled on a lender that helped rebuild Germany after the Second World War, it was claimed today.
Labour leader Eamon Gilmore said a state bank was necessary to inject much-needed cash into struggling smaller firms and business start-ups.
A Strategic Investment Bank - based on Germany's KfW bank, which was set up under the post-war Marshall Plan to rebuild a devastated Europe - would also raise money for public projects, he claimed.
"Businesses need money to start up and keep going," he said.
"At the moment and certainly for the foreseeable future there does not appear to be any prospect that the existing banking system is going to provide that finance."
Mr Gilmore said the proposed bank would be set up with €2bn taken from the national pension fund, with another €18bn raised from international money markets.
Under the Labour plan, it would have a small number of branches and, while state-owned, would be run independently of Government.
As well as supporting smaller businesses, it would provide funding for major public projects such as broadband, transport and renewable energy.
"It is absolutely necessary - we have gridlock in the Irish economy," insisted Mr Gilmore.
"On the one hand the Government is paring back on expenditure and on the public capital programme and on the other hand the private banking system is simply not lending to businesses."
Labour deputy leader Joan Burton said Ireland was suffering from "complete market failure".
Unless jobs are created through new investment, tens of thousands of young people will be devastated by the "utterly corrosive effects" of long-term unemployment, she added.