Lending up as Spain’s recession shows signs of coming to an end

ECB head Mario Draghi has tried to encourage banks to recommence lending across borders
ECB head Mario Draghi has tried to encourage banks to recommence lending across borders

BANK lending increased in Spain in August as the crunch in peripheral Eurozone economies showed signs of ending, European Central Bank (ECB) data showed yesterday.

The troubled Iberian economy saw lending rise 0.8 per cent in the month, representing a small turnaround from a fall of more than 12 per cent in the last year.

It comes after ECB boss Mario Draghi has tried to end market fragmentation, where banks are reluctant to lend across borders.

Overall private sector loans in the Eurozone fell two per cent in the year to August, deepening from the 1.9 per cent fall a month earlier.

“The rate of credit growth should soon stabilise, given the improvements in the periphery and given continued super-low policy rates from the ECB,” said Christian Schulz from Berenberg Bank. “For the ECB, the data provides ample reasons to keep interest rates low for an extended period of time, but not necessarily to take more action.”

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