Eurozone lending stagnates as recovery remains elusive

Bank lending to companies and households in the eurozone stagnated last month, indicating the bloc’s long-awaited economic recovery has yet to gain traction, European Central Bank data showed on Tuesday.

On a quest to stem inflation, the ECB has jacked up interest rates to record highs, bringing bank lending to a standstill in a region that depends on it as its lifeblood.

Banks increased their stock of loans to firms by just 0.2 per cent in January after a revised 0.5 per cent increase in the last month of 2023.

Credit to households grew by 0.3 per cent last month, the slowest pace since 2015, after rising by a revised 0.4 per cent in December.

Lending growth has been hovering around zero since the autumn but is expected to slowly recover in the coming months as the ECB likely begins cutting interest rates.

Eurozone banks expect a small rebound in demand for mortgages and corporate loans for the first time in two years as a slump in lending shows early signs of moderating, an ECB survey showed last month.