The European Central Bank’s (ECB’s) Bank Lending Survey has provided a big piece of good news for the eurozone as it showed European companies are once again borrowing to invest.
Here’s the killer chart:
Most significantly the authors note, “financing needs related to fixed investment in particular…contributed to the increase in net loan demand by euro area enterprises, recording the first significantly positive contribution since mid-2011”. That is, companies (particularly in Germany and Spain, two of the region’s largest economies) are finally starting to borrow to invest rather than merely restocking inventories suggesting they expect better demand for goods and services in future.
Analysts greeted the news with enthusiasm on Twitter:
However, while actual demand has improved there are signs of possible trouble ahead with expectations of future credit demand do appear to be falling somewhat. Yet the improvement raises the likelihood that Europe will surprise people positively in 2015 — a prospect that many had doubted.
There was even more good news in the survey as demand for credit to fund house purchases beat expectations. In the last three months of 2014 demand for housing loans rose 24%, markedly above its historical average, driven predominately by perceived housing market prospects:
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