EUROZONE DATA
- Whilst Eurozone bank lending growth rates of 1.2% Y/Y for NFCs and 0.8% Y/Y for households are still subdued historically [detailed in part 1], they are at least moving away from a period of closer to zero credit growth in late 2023 that acted as a large relative drag on the economy having been growing at much stronger rates in 2022 and 1H23.
- This transition away from heavy relative drags, worth as much as 4% GDP earlier this year on a slow moving 12m/12m basis looking at new lending, to a small positive boost of 0.5% GDP (or ~1.5% GDP on a shorter-term measure) has been led by Italy and Spain after particularly sharp corrections in bank lending.
- Germany meanwhile is getting close to a neutral setting on the same 12m/12m basis whilst France remains in negative territory at -1.0% GDP but increasingly less so.
- On a related note, ECB's Schnabel had this to say on lending yesterday: "But when I look at the data, it seems to me that the restrictive impact of our past monetary policy tightening is fading visibly. We see that real interest rates are now close to zero across maturities. This is very low from a historical perspective. We also see in our most recent euro area bank lending survey that almost all banks report that loan demand is no longer affected by the general level of interest rates. That’s very different from a year ago when nearly half of euro area banks reported that interest rates weighed on loan demand. Moreover, the housing market, which tends to be the most interest rate sensitive, seems to be bottoming out. We’ve also seen an increase in the demand for mortgages."
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