Lending Slows in Europe as Economic Outlook Darkens

FRANKFURT, Germany (AFP) — The pace of growth in lending to eurozone companies slowed in September, European Central Bank data showed Monday, bolstering outgoing ECB President Mario Draghi’s message that more stimulus is warranted to confront an economic slowdown.

Loan growth to nonfinancial firms shed 0.6 percentage points compared with August, to 3.7% year-on-year, the ECB said in figures adjusted for some purely financial transactions.

Credit to households expanded by 3.4%, the same pace as the two previous months.

Overall, private sector credit growth slowed from 3.8% to 3.7%.

The monthly data is closely watched to gauge the effectiveness of the ECB’s measures to encourage lending and investment in the single currency bloc in a bid to drive up economic growth and inflation.

Draghi, after chairing his final meeting as ECB chief last Thursday, said a recent decision to unleash fresh stimulus in the eurozone was “justified” in the face of a weaker economy.

In September, the Italian economist and his colleagues cut a key interest rate deeper into negative territory and loosened conditions on a new round of cheap credit to lenders.

More controversially, the ECB also relaunched corporate and government bond purchases to the tune of $22.2 billion a month, sparking rare public criticism from some council members who said the move was too drastic.

Draghi formally hands over to his successor, former International Monetary Fund chief Christine Lagarde, in a ceremony at the ECB later Monday.

Observers say her first task will be to heal the rift caused by Draghi’s last easy-money package.

© Agence France-Presse

%d bloggers like this: