Berlin (Reuters) – Companies in Germany are finding it easier to get fresh money again.
25.6 percent of companies currently negotiating a loan reported reluctance from banks in December. In September it was still 29.2 percent, as the Munich Ifo Institute announced on Thursday in its quarterly survey. “The banks remain cautious when granting loans,” said the head of the Ifo surveys, Klaus Wohlrabe.
The institute blames two things in particular for this: “The high key interest rates and the uncertainty among companies with regard to economic development are also reflected in the banks’ lending practices,” said Wohlrabe. At 4.5 percent, the key interest rate of the European Central Bank (ECB) is currently higher than ever since the introduction of euro cash in 2002. Interest rate cuts are not expected until the summer. The German economy shrank by 0.3 percent last year due to high interest rates, which are crippling the construction industry. Some economists are expecting another negative year for 2024. The number of company bankruptcies rose by 24.1 percent to 14,751 from January to October 2023, also due to the weak economy. The local courts put the outstanding claims of creditors at almost 1.6 billion euros for October alone, which is around twice as much as a year before.
The lower credit hurdle is primarily due to service providers: the proportion of companies complaining about more difficult access to loans fell from 31.5 to 25.7 percent. The situation also eased in the construction industry (from 29.4 to 19.9 percent). In industry, the indicator also fell by almost two points to 25.6 percent.
IT IS HARDER FOR SMALL BUSINESSES
In retail, the share remained unchanged at 28.2 percent. “The economic situation of many retailers continues to be difficult due to customers’ reluctance to buy,” explained the Ifo Institute. “This is also reflected in the loan conditions.” In wholesale, the key figure rose from 20.2 to 26.9 percent.
In general, it is easier for larger companies to get new loans. For the self-employed and small businesses, however, the credit hurdle is higher – at an above-average 45.7 percent. “Access to credit for companies remains difficult in the fourth quarter too,” said Fritzi Köhler-Geib, chief economist at the development bank KfW, commenting on the development. “In view of the restrictive monetary policy and the weak economic outlook, a turnaround in the credit hurdle is a long time coming.”
(Reporting by Rene Wagner, edited by Scot W. Stevenson; if you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com)
2024-01-18 10:31:05
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