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ECB lending pace picks up as EU economic clouds gather
FRANKFURT AM MAIN, Aug 28, 2019 (BSS/AFP) – Growth in lending to eurozone
businesses and households accelerated in July, the ECB said Wednesday, ahead
of a key central bank meeting expected to unleash new economic support
measures.
Loans to non-financial companies and European households rose by 3.6
percent in July compared with a year ago, after having already picked up by
3.5 percent in June.
A breakdown of the data showed that lending to households grew by 3.4
percent, while lending to financial companies excluding insurance companies
and pension funds was up by 2.4 percent.
Growth in loans accorded to industrial and commercial companies meanwhile
held steady at 3.9 percent on a 12-month basis — the same rate as in June.
The strong lending is a sign that companies are struggling, said Stephanie
Schoenwald of KfW Research.
“As far as the economy is concerned, robust lending growth is more of a
warning signal than a bright spot,” she said.
“To cushion the weak order situation and high inventories, companies are
currently in need of additional financial resources, above all to bridge
liquidity gaps.”
The ECB’s key interest rates are already at historic lows.
But the bank’s chief Mario Draghi signalled after a meeting in July that it
could unleash a new round of easing measures and cut rates further to fight
sluggish growth and shore up stubbornly low inflation.
Since that meeting, economic clouds have continued to darken, with the
bloc’s biggest economy Germany now projected to slide into recession in the
third quarter.
Official data this month showed economic growth in the 19-country eurozone
slowing to 0.2 percent in the second quarter of 2019, after expanding by 0.4
percent in the first.
The threat of a no-deal Brexit has also risen drastically since Boris
Johnson took over as British prime minister.
In a move enraging anti-Brexit MPs, Johnson on Wednesday suspended
parliament until two weeks before the UK is due to leave the EU, meaning that
his opponents will have less time than expected to thwart his plans to quit
the bloc at the end of October.
BSS/AFP/SR/1700 HRS