Euro Zone Companies Face Increased Difficulty in Accessing Credit, ECB Survey Indicates

The ECB has been implementing a series of interest rate hikes to combat inflation fueled by energy costs, but it is anticipated that the central bank will maintain its current rates this week, pending further analysis on the impact of elevated borrowing costs on the economy.

According to the ECB's quarterly Survey on the Access to Finance of Enterprises, signs of strain among companies are becoming apparent. Many firms reported facing higher interest rates and a reduction in available bank loans. Companies indicated a growing need for credit lines while simultaneously finding it harder to obtain them.

The ECB noted, "The continued simultaneous increase in the need for both trade credit and credit lines suggests that firms are facing broader pressures on their working capital, potentially driven by higher input costs." It also pointed out that the decline in credit line availability indicates that banks are exercising greater caution in extending this type of financing, which may further limit firms' ability to satisfy their short-term funding requirements.

The proportion of businesses citing obstacles to securing bank loans rose to 7% in the three months ending September, up from 5% in the previous quarter. The survey also highlighted significant hikes in firms' projections for prices, wages, and other costs, although the ECB noted that these figures may be influenced by a substantial number of new respondents. For companies that participated in both the most recent and the previous survey, the average expectation for price increases over the next 12 months climbed to 3.6%, from 2.5% in the previous quarter. In the broader sample of 12,822 companies, anticipated selling prices increased to 7.1%, up from 3.2% in the earlier poll.

(Reporting by Francesco Canepa; Editing by Andrew Heavens)