Since the start of 2014 SME interest rates have declined across the euro area but have remained stubbornly high in Ireland.10 High levels of household and SME debt, a hangover from the Irish credit boom, continue to remain a source of vulnerability in terms of both of net worth and servicing costs.
Higher debt levels negatively affect consumption and investment decisions, compress demand for bank credit, thereby reducing the effectiveness of unconventional monetary policy measures on the real economy.