ECB: Lending to companies in the Eurozone fell for the first time since 2015
In October, banks in the eurozone reduced loans to companies for the first time since the summer of 2015, data from the European Central Bank (ECB) showed. Bank loans to companies decreased by 0,3 percent in October compared to the same month last year, after the growth of 0,2 percent in the previous month, the ECB announced.
The last time banks cut loans to companies was in July 2015, when the eurozone began to recover from the debt crisis. Lending to households in October increased by 0,6 percent, the weakest since the beginning of 2015. In September, it increased by 0,8 percent. Reduced lending to companies and limited money supply are the result of the ECB's tight monetary policy, which from July last year to mid-September this year raised interest rates by 4,5 percentage points in order to curb inflation by curbing demand.
Tighter financing conditions resulted in a drop in economic activity in the single currency area in the third quarter, and S&P Global in its latest monthly survey of business activity estimated it could enter a recession later this year. Some analysts now fear that the ECB has gone too far in raising interest rates and that lending has become so restrictive that it could deepen the recession or slow the economy's recovery in the coming year, Reuters notes, reports SEE.biz.eu.