Ireland’s financial sector ‘struggling to finance innovation’

The Republic’s financial sector is ill suited and struggling to finance innovation in intangible assets, Andrew McDowell, vice president of the European Investment Bank (EIB) has said.

"Enterprise financing is primarily bank based and bank finance is ill-suited to financing innovation and intangibles," Mr McDowell said at the American Chamber of Commerce Ireland's US-Ireland business conference.

He said investment in intangible assets requires more expertise risk assumptions, adding that it’s “difficult to mortgage an algorithm”.

Mr McDowell was speaking about innovation in the Republic’s economy, noting that the country currently faces major challenges. Breixt uncertainty, he flagged, has reduced overall investment in research and development amongst Irish business. An EIB survey showed that reticence toward investment was unique in Irish business compared to its EU peers.

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Mr McDowell also announced a €30 million loan to Galway-based aerosol drug delivery company Aerosol, noting it as an example of the bank’s investment in innovation.

The vice-president of the EIB is one of the names being touted as a replacement to Central Bank of Ireland governor Philip Lane. Asked whether he was interested in the role, Mr McDowell told The Irish Times: "I'm perfectly happy in Luxembourg".

At the same event, An Taoiseach Leo Varadkar said the Government was confident about the future despite the Brexit challenges.

“In a post-Brexit world we’ll continue to be a stepping stone and continue to provide a gateway [TO EUROPE],” he said, speaking of the country’s relationship with the US.

“While other countries may be uncertain about their place in the world, we’re not,” he added.

An Taoiseach’s comments come after the American Chamber issued a report outlining Irish companies investments in the US. It noted that more than 700 US companies now employ 155,000 people directly in Ireland with an additional 100,000 employed in supporting business. Irish business employ more than 100,000 Americans across all sectors of the US economy.

Despite the growing workforce, the question of housing in the Republic was raised as a constraint by JP Morgan's managing director in Ireland, Carin Bryans.

“We are also very aware of our housing shortage and infrastructural constraints and we are investing to put that right,” Mr Varadkar said.

He also spoke more broadly about the Government’s ongoing economic investments. He said: “In 2018, we recorded a budget surplus and intend to do so this year again. We achieved this important milestone while reducing income taxes, not by as much as I would have liked, but reducing them nonetheless.”