Equity investments by Enterprise Ireland yielded almost £50 million (€63.5 million) in the first half of the year, 85 per cent more than in the previous 12 months. In addition, the State-owned company which invests in indigenous industry, gained £3.55 million from venture capital funds since last year.

The body, which reported that exports from firms it supports grew by 8.8 per cent to £9.27 billion last year, said the return on its equity portfolio in 1998 was £11.5 million.

Total sales generated by companies supported by the body were worth £19.82 billion last year, up 7.1 per cent on 1998. The fastest growing sector was "international services" - including IT, Internet-related and telecoms firms as well as financial and healthcare companies.

Enterprise Ireland's chief executive, Mr Dan Flinter, said its client companies were "positive" about prospects for continued growth this year. A sample study of 150 food firms indicated that exports rose 13 per cent in the January-March period.

But he added that many start-up firms were encountering difficulty securing office space in central Dublin. Property owners wanted such companies to lock into 20-year leases and some were seeking binding covenants - described as insurance-type arrangements - where firms would pay a premium if they terminated a lease before it matured.

"I know of some instances where property developers are looking for equity in companies," Mr Flinter said at a briefing yesterday. Client companies had also expressed concern about access to skilled labour as the market tightened.

Enterprise Ireland's specific remit centres on business development with a secondary aim of job creation. The body reported a net rise of 3,067 jobs to 135,878 in level of employment in its client companies at the end of 1999 after some 9,800 jobs were lost in the year. Some 80 per cent of these arose as firms contracted or introduced structural changes with the remainder arising as companies closed.

Mr Flinter said the body would focus on generating more business in continental Europe, particularly Germany and France. Exports to the continent were worth £2.9 billion last year, up 6 per cent, compared with £1.25 billion in business with US firms and sales worth £1.15 billion in Asia and other world markets.

The focus on Europe is to reduce dependence on the British market, Irish exporters' largest. Sales to Britain rose 8.3 per cent to £3.95 billion last year. The body said sterling's strength, though advantageous to some Irish firms, had reduced business for certain sub-suppliers and service providers as British exports declined.

Some 59,073 of the 135,878 jobs supported by the body are in Dublin. An additional 7,158 jobs are in the midlands, 10,877 are in the western region and 6,544 are in the north-west.

Yet while Mr Flinter said Dublin-based companies were "for the first time" considering expanding out of the city, he stressed that "relocation" to the regions was "not the central issue".

Enterprise Ireland would focus on endogenous development, described as growth from within a region. There were four elements to this policy, aimed at creating clusters of firms at specific locations.

These were:

developing the road, air transport and IT infrastructure;

focusing on generating added-value business from existing firms;

helping "high potential" start-up firms

and developing links with third level education bodies to secure pools of new available to work in specific areas.