Weak eurozone lending adds to recession fears
BANK lending across the eurozone came to a near standstill last month, European Central Bank data showed on Wednesday (Oct 25), providing further evidence that the 20-nation bloc was skirting a recession.
Growth indicators from industrial output data to PMI and sentiment readings in recent weeks are all suggesting that eurozone’s economy is now either stagnating or even shrinking as weak external demand, consumer caution and high interest rates are exerting their toll.
Lending to businesses expanded by just 0.2 per cent in September, the lowest figure since late 2015 when the bloc was just emerging from its debt crisis, and down from 0.7 per cent a month earlier.
Still, detailed data suggest that underlying trends may be more nuanced as the monthly flow of fresh loans was a positive 14.0 billion euros, reversing much of the previous month’s negative 19.9 billion euro reading.
Lending is taking a hit after a string of interest rate hikes took the ECB’s key rate to a record high 4 per cent last month, all in the hope this would depress activity enough for inflation to return to 2 per cent.
Lending to households meanwhile rose by just 0.8 per cent after a 1.0 per cent increase in August with the monthly flow of loans at a positive 4.5 billion euros, ECB data showed.
SEE ALSO
The ECB’s own survey of the bloc’s biggest banks show they plan to further curb businesses’ access to credit in the fourth quarter and also see waning demand for loans.
The M3 measure of growth money supply, seen in the past as a good indicator of future economic expansion, meanwhile contracted by 1.2 per cent, an improvement on the 1.3 per cent drop a month earlier and better than the minus 1.7 per cent reading expected in a Reuters poll. REUTERS
Share with us your feedback on BT's products and services
