Euro zone companies cut loan applications for first time in six years: ECB

By Administrator_India,

Capital Sands

Credit applications by euro zone companies unexpectedly fell last quarter for the first time in six years, despite a further reduction in the European Central Bank’s main interest rate, an ECB survey showed on Tuesday.

The euro zone has been struggling with sluggish growth for two years as a global trade war and a slowdown in China hurt its exports, offsetting stronger domestic demand in some countries.

This is now starting to show in companies’ decisions to cut down on investment and credit – a trend that banks now expect to continue, the ECB said in its quarterly Bank Lending Survey.

“Net demand for loans to enterprises declined in the fourth quarter of 2019 … the first time this had been seen since the fourth quarter of 2013, whereas banks had expected it to remain stable overall,” the ECB said.

“That decline in net demand was broadly based across a number of larger and smaller euro area countries,” it added.

Demand for mortgages continued to rise, however, particularly in France, Italy and Germany – likely strengthening concerns that the ECB’s ultra-easy policy is fuelling housing bubbles in some countries.