Sharp decline in loans to construction firms

These people really need to learn what percentages mean.

The harsh realities are:

  • We’re heading back towards 60bn a year growth in PSC. Earlier in the year, we had looked like getting the rate down below 50bn a year, but that’s reversed in the last few months. The drop in the percentages, from 30% yoy to the current 18.9% is almost entirely due to the fact that the outstanding debt has grown so much, which is used as the baseline for the percentage calculation - the rate of borrowing has dropped only slightly.

  • While the construction percentage drop sounds impressive, again this is substantially due to the growth in the baseline. Construction borrowing has gone from 12.3bn → 19.9bn → 25.1bn. So we’ve gone from a growth rate of 7.6bn in the year to Sep 2006 to 5.2bn in the year to Sep 2007 - considerable, but nothing like the ‘more than half’ drop 61.5% → 26.6% suggests. But ignoring the exact amounts for a second, isn’t it slightly worrying that construction companies in ireland are still massively increasing their debts (effectively doubled in 2 years) going into a clearly signposted slowdown.