Eurozone banks tighten grip on companies, limiting their ability to borrow

Eurozone banks tighten credit rules for companies in the final quarter of last year, with further tightening expected in the first three months of 2025, strengthening the case for further interest rate cuts as the economy slows.

Eurozone officials are expected to cut borrowing costs again this week, despite the threat posed by US President Donald Trump’s protectionist agenda.

The European Central Bank is likely to cut its benchmark deposit rate by another quarter of a percentage point to 2.75% on Thursday, its fourth straight cut.

Lending growth has slowed broadly in 2024, driven by the economy’s failure to deliver a long-awaited recovery, with consumption sluggish, a two-year industrial slump, weak export demand and muted government spending.