Recession cont'd

European loan growth contracts for the twelfth month in a row

May 29, 2013
Obsession
Euro Crunch
May 29, 2013

growth of euro zone loans to private sector

The value of loans made in the euro zone to the private sector fell by 0.9% in April (pdf), the twelfth month in a row that credit extended to the private sector fell from the same period a year before. In fact, lending to the private sector hasn’t risen year-over-year since April of 2012.

The data confirms euro zone policymakers’ latest worry: a credit crunch is making the economic downturn more painful for private sector businesses—particularly small- and medium-sized ones. The European Central Bank (ECB) says it’s considering taking action to ease the loan process for businesses struggling to weather a prolonged recession. The bank could announce those policies when it makes its next monetary policy decision on June 6.

But don’t count on it. The ECB has been hesitant to enact policies that juice European economic growth, even though it has shown it will “do whatever it takes” to save the euro currency. The funding crunch will probably rage on.

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