ECB Survey Finds Euro Zone Firms Face Tighter Credit as Costs Squeeze Working Capital

Euro zone firms are finding it harder to obtain bank credit while rising fuel and input costs pressure their finances, according to the European Central Bank's quarterly Survey on the Access to Finance of Enterprises released Monday. The share of firms reporting obstacles to obtaining a bank loan rose to 7% in the three months to September from 5% in the previous quarter. Firms reported higher interest rates and reduced availability of bank loans even as demand for credit lines increased. "The continued simultaneous increase in the need for both trade credit and credit lines suggests that firms are facing broader pressures on their working capital, potentially driven by higher input costs," the ECB said, adding that banks are becoming more cautious in extending such financing. Firms participating in both of the last two survey rounds expected prices to rise 3.6% over the coming 12 months, up from 2.5% in the second quarter. Across the full sample of 12,822 enterprises, expected selling price increases jumped to 7.1% from 3.2%, though the ECB said the shift was skewed by a large number of first-time respondents. The ECB has been gradually raising interest rates to curb energy-driven inflation and is expected to hold steady this week.