Euro zone: further increase in loans granted to businesses

The screw is not tightening within the euro zone, quite the contrary. The growth of loans granted by euro area banks to businesses accelerated again in November, driven by long-term loans, the European Central Bank (ECB) said on Friday. Loans to industrial and commercial companies, adjusted for certain strictly financial transactions, increased over one year by 2.9% in November, after 2.5% in October and 2.1% in September, but still well below increases of more than 5% at the start of the year.

Loans granted to households remained at a high level, climbing 4.2% in November, significantly as much as in October and September, still being drawn by loans for the purchase of housing. Globally, growth in loans to the private sector reached 3.7% year-on-year, up from 3.3% in October, against the backdrop of interest rates hovering at their lowest.

M3 money supply growth fell back to 7.3%, as public aid triggered in the face of the first wave of the Covid-19 pandemic normalized. The M3 aggregate is used by the ECB as a leading indicator of inflation, including cash in circulation, loans over two years old, and household and corporate deposits. Inflation peaked at 4.9% in November year on year, its highest since the introduction of the single currency in 1999, due to the exceptional circumstances created by the pandemic and expected to subside during 2022, according to the ECB.

The Monetary Institute forecasts inflation of 3.2% in 2022, before the aggregate stabilizes at 1.8% in 2023 and 2024, then falling below the 2% target set for the medium term. As a result, the Monetary Institute has lightened its support system for the economy, but maintained safety nets in an uncertain economic context marked by the Omicron variant.

>> Buy and sell your investments (stocks, cryptocurrencies, gold, etc.) at the right time thanks to Momentum, Capital’s newsletter on technical analysis. And right now, with the promo code CAPITAL30J, enjoy a month of free trial.