IRISH SMALL and medium-sized businesses faced the second most difficult financing enironment in the EU last year.

Only Greek SMEs had greater challenges in accessing credit, according to the European Commission’s annual assessment of business environments.

On a scale of zero (no access to financing) to 1 (full access), Ireland scored less than 0.2 in the assessment of the ease with which SMEs can raise finance, a sharp fall on previous years.

“The Government should continue to keep a close eye on access to finance, as improvement in this area is crucial for future growth,” the report recommended.

Greek SMEs were scored at 0.15, while Portuguese companies were in third position, on 0.33. The EU average was above 0.5; Finnish, Latvian and Swedish SMEs had the best credit access.

Irish SMEs were also held back last year by weak domestic demand, lack of innovation and rising costs of doing business.

The commission endorsed the Government’s Action Plan for Jobs, describing it as “is a broad-based plan to address these challenges. If implemented steadfastly, it could considerably reduce the differences in the competitiveness of the domestic and multinational sectors.”

More generally, the report concludes that “Ireland has made good progress in achieving its adjustment programmes goals. Despite the remaining challenges, these efforts have improved business prospects and strengthened competitiveness.”