The growth of lending to businesses in the Euro area accelerated in April 2025. Banks in the 20-country community granted 2.6 percent more loans to companies over the past year, marking the strongest increase since June 2023. In March, the growth rate was 2.4 percent.
Causes of Growth
This development is significantly favored by the decline in interest rates in the Euro area. Since June 2024, the European Central Bank (ECB) has lowered its key interest rates seven times, most recently in April to a deposit rate of 2.25 percent. The lower interest rates make it easier for businesses to take out loans, thereby promoting corporate financing.
Impact on Private Households
Similarly, lending to private households increased by 1.9 percent compared to the previous year (March: +1.7%). In parallel, the money supply M3 – an indicator of cash and short-term investments – grew by 3.9 percent in April, exceeding the expectations of financial experts. This data provides important indications of a potential inflation trend and reflects an overall expansive monetary policy.
Effects on Investors and Savers
This development is relevant for investors and savers: an increasing lending to businesses indicates a positive economic dynamic with potential growth and employment effects. At the same time, it signals an environment with favorable financing conditions as a result of the ECB’s rate-cutting course.