Euro zone business lending unexpectedly surges in June

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Lending to euro zone companies accelerated in June, confounding fears that banks are tightening access to credit as uncertainty about inflation and the fallout of the war in Ukraine are pointing to recession risks, European Central Bank data showed.

Lending to companies in the 19-country euro area expanded by 6.8% in June after 5.8% a month earlier, while credit growth to households held steady at 4.6%, fresh data showed on Wednesday.

Banks said they tightened access to credit already in the second quarter and the ECB's quarterly lending survey last week pointed to even more caution in the current quarter as high fuel prices and war in Ukraine deplete savings and sap confidence. This has raised fears that the ECB's rate hikes - started with a 50 basis point increase last week and set to continue into next year - could exacerbate the downturn.

The monthly flow of fresh loans to businesses totalled €54 billion last month, according to adjusted date, more than double the May figure. Growth in the M3 measure of money circulating in the euro zone meanwhile slowed to 5.7% from 5.8%, partly a reflection of the ECB reduction in money printing. That was still ahead of expectations for 4.6%

 

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