New euro area business loans plunged in April, indicating banks are tightening access to credit even as the bloc begins to emerge from a year of lockdowns, Central Bank data showed today European.
With a third wave of the pandemic receding in the region, economic activity began to pick up in April after a double-dip recession.
But much of the service sector has remained closed and with exhausted balance sheets.
The monthly flow of loans to businesses in the euro area was negative at € 26.8 billion in April, reversing much of the increase of € 51.1 billion a month earlier, driving the growth rate annual new loans to a 14-month low of 3.2% after that of last month. 5.3%.
The monthly drop is the second largest on record, only surpassed by a drop of 28.6 billion euros in June 2009, at the height of the global financial crisis.
Banks, which provided abundant emergency liquidity at the onset of the recession, said they were likely to restrict access to liquidity this quarter and the potential reduction in government support to businesses could further limit their ability to lend.
This figure should worry ECB policymakers when they meet next month, as the nascent economic recovery relies heavily on fiscal and monetary support.
The growth of loans to households accelerated from 3.3% to 3.8%. The annual growth rate of the M3 measure of money supply, mainly reflecting ECB bond purchases, slowed to 9.2% from 10% a month earlier, below market expectations for growth of 9.5%.