Eurozone banks tighten credit amid economic, geopolitical risks

A July 2024 European Central Bank survey found that 7 % of eurozone banks have tightened lending criteria for corporate loans, 9 % for mortgages and 12 % for consumer credit as higher interest rates and geopolitical uncertainties increase risk. Rejection rates for loan applications have risen, especially for consumers, while demand for business credit grew modestly by 3 % in Q2 but housing loan demand fell 15 %. Banks anticipate further declines in mortgage demand and a steady level of consumer loans in the third quarter, while easing financing conditions for environmentally sustainable projects.

Eurostat data on non‑financial corporate debt shows stark differences across the EU. Luxembourg tops the list with debt at 251.1 % of GDP, followed by Denmark (115.4 %), Cyprus (107.3 %), the Netherlands (106.3 %) and Belgium (90.6 %). In France, corporate debt reaches 91.6 % of GDP, marking a genuine macro‑economic vulnerability, and Sweden’s debt, driven by commercial real‑estate exposure, stands at 108.6 % of GDP. Italy and Greece exhibit notably lower corporate debt ratios, reflecting a reliance on public‑sector financing. Central banks note that much of the elevated debt figures in the leading economies stem from cross‑border financing structures rather than domestic borrowing, suggesting the underlying risk may be lower than headline statistics imply.