Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

ECB Says Private Lending Contracted at Fastest Pace in 3 Years

Don't Miss Out —
Follow us on:

Oct. 25 (Bloomberg) -- Lending to households and companies in the euro area contracted at the fastest pace in almost three years in September amid a deepening economic slump.

Loans to the private sector fell 0.8 percent from a year earlier after dropping an annual 0.6 percent in August, the Frankfurt-based European Central Bank said today. That’s the fifth decline in a row and the steepest since October 2009. Loans contracted 0.2 percent in the month.

The 17-nation euro economy may have fallen into recession in the third quarter after shrinking 0.2 percent in the previous three-month period. While the ECB’s pledge to buy unlimited bonds of debt-strapped countries has shored up investor confidence, business sentiment in Germany, Europe’s largest economy, unexpectedly declined in October to the lowest in more than 2 1/2 years.

“Lending growth is likely to remain weak for quite some time, partly because we expect the economy to remain weak,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. “We’re not seeing any sharp declines in output but no strong growth either. We don’t expect a sustained uptrend before the second half of next year.”

ECB President Mario Draghi said yesterday he expects the economy to remain weak in the near term before recovering very gradually in 2013. The International Monetary Fund earlier this month cut its euro-region growth forecast for next year to 0.2 percent from 0.7 percent and said the economy may shrink 0.4 percent this year as governments cut spending.

The rate of growth in M3 money supply, which the ECB uses as a gauge of future inflation, fell to 2.7 percent in September from 2.8 percent in August, the ECB said today.

M3 grew 3 percent in the third quarter from a year earlier. M3 is the broadest gauge of money supply and includes cash in circulation, some forms of savings and money-market holdings.

To contact the reporter on this story: Jana Randow in Frankfurt at jrandow@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.