Private sector loans in euro zone fall again

Lending to households and companies in the euro zone contracted for a seventh month in November as the recession damped demand for credit.

Loans to the private sector fell 0.8 per cent from a year earlier after dropping a revised annual 0.8 per cent in October, the Frankfurt-based European Central Bank said yesterday.

“Loans to the private sector reflect the real economy, and that will remain fairly weak for most of the year,” said Tobias Blattner, an economist at Daiwa International in London. “Still, there should be some light at the end of the tunnel at the end of the year and demand for credit should pick up.”

Separately, ECB figures showed that deposits in banks by consumers and firms in troubled euro zone member states remained mainly stable in November.

The figures indicated that the worst fears of bank collapses or even a euro zone exit are receding.

Private-sector deposits at Italian banks rose by 0.1 per cent to €1.443 trillion in November after falling 2 per cent in October. Spanish and Greek deposits were also up marginally.

In Ireland, they fell 0.7 per cent to €199.1 billion, while in Portugal they rose marginally.