Bank lending across the euro zone continued its accelerated growth in August, achieving multi-year highs, according to data released by the European Central Bank (ECB) on Thursday. This increase is attributed to lower interest rates facilitating a greater flow of credit within the region.
Credit growth to businesses saw a notable increase, rising to 3.0% in August from 2.8% the previous month, marking its highest level since mid-2023. Simultaneously, loan growth to households also experienced an uptick, reaching 2.5% from 2.4%, representing its best rate since April 2023. The ECB, having reduced interest rates by 200 basis points in the year leading up to June, anticipates that more affordable credit will stimulate investment and spending throughout the euro zone.
The ECB hopes this will positively impact the bloc, which has faced challenges related to sluggish economic growth in recent years. However, the M3 measure of money circulating within the euro zone, often used as an indicator of future economic activity, expanded by 2.9%. This figure fell short of the expected 3.3%, partly reflecting an ongoing reduction in the ECB’s balance sheet.
