- Full report here
The ECB’s latest Survey on the Access to Finance of Enterprises (SAFE) showed that euro area companies faced a sharp increase in borrowing costs during the second quarter of 2026, even as overall access to bank credit remained broadly stable.
A net 42% of firms reported higher interest rates on bank loans, up sharply from 26% in the previous quarter, with both SMEs and large companies experiencing similar increases. Other financing costs and collateral requirements also continued to rise, although at a slower pace than in the previous survey.
Demand for bank loans picked up modestly, while loan availability was little changed overall. However, conditions diverged by company size, with large firms reporting improved access to credit while SMEs saw a slight deterioration. As a result, the ECB’s bank loan financing gap edged up to 3% from 2%.
Firms continued to cite the general economic outlook as the biggest obstacle to obtaining external financing, although they reported a further improvement in banks’ willingness to lend. Companies also became slightly more pessimistic about their own business outlook, particularly regarding future sales and profits.
On the inflation front, firms’ price and cost expectations eased further. Companies expect selling prices to rise by 3.2% over the next 12 months, down from 3.5%, while expected non-labour input cost growth slowed to 5.2% from 5.8%. Wage growth expectations also moderated to 2.5% from 2.8%.
Inflation expectations remained broadly stable, with median one-year and three-year expectations holding at 3.0%, while five-year expectations edged up to 3.1%. Most firms continued to see upside risks to the longer-term inflation outlook.
The survey also highlighted the impact of the ongoing Middle East conflict on euro area businesses. Many firms reported diversifying suppliers, investing in energy efficiency, and building inventories to strengthen supply chain resilience, while relatively few had withdrawn from affected export markets. Large firms were generally more proactive in adopting mitigation measures than SMEs.
Separately, companies indicated that artificial intelligence investments over the next year will be financed primarily through internal funds (72%), with bank loans, grants and leasing each expected to play a secondary role, while equity financing and debt issuance are expected to remain limited.
This article was written by Giuseppe Dellamotta at investinglive.com.