The growth of loans granted by banks in the euro zone to businesses rose sharply in August as inflation increased the cost of financing, the European Central Bank (ECB) said on Tuesday.
Loans to industrial and commercial enterprises, adjusted for certain strictly financial operations, increased by 8.7% over one year, the fifth consecutive increase and the highest score since January 2009 during the financial crisis, according to a press release. .
In this group, the growth for loans with a duration of less than one year rose to 18.7%, unheard of since the entry of the euro.
Businesses are increasingly knocking on banks’ doors to finance their operating costs, which have been increased by the rise in energy and raw material prices, while a significant rate hike was initiated this summer by the ECB.
Loans to companies for a period between one and five years also increased markedly, by 9.8%.
Household loans up 4.5% in August
Loans granted to households, including loans for consumption and housing, continued to grow at an unchanged rate of 4.5% in August.
Overall, adjusted loans to the private sector climbed 6.7%, more than double the score posted a year ago.
M3 money supply growth, 6.1%, marks a rebound in a phase of decline that began after the peak at the start of 2021 (+12.5%) while public aid linked to the effects of the Covid-19 pandemic are less demanded.
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The M3 aggregate is used by the ECB as a leading indicator of inflation, including cash in circulation, loans over two years and household and business deposits.
Despite a slower pace of money supply, inflation hit a record 9.1% in the euro area in August, driven by soaring energy and commodity prices against a backdrop of Russian invasion war in Ukraine.
Determined to bring the aggregate back to 2%, the ECB decided to raise its key rates, by 0.50 points in July and 0.75 points in September – unheard of in the euro zone – clearly suggesting that further increases will follow, even if this must weigh on the evolution of the economy.
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