Capital Economics analyst Harry Chambers says the ECB’s Q3 bank lending survey
shows demand weakened across most loan categories, weighing on the growth
outlook. Housing loan demand posted its largest decline since Q3 2023 and banks
expect further falls in Q4. Business investment loan demand also weakened but is
expected to rebound. A composite of credit standards and demand suggests the
euro-area economy was effectively stagnant in Q3. Chambers says this does not
necessarily implies a sustained downturn, but banks’ pessimism raises downside
risk to Capital Economics’ prior forecast of 0.2% q/q growth in Q4.