Lending to businesses still weak in Europe

[January 03, 2013]  FRANKFURT, Germany (AP) -- Bank loans to companies fell again in Europe, another sign that the economy remains slack in the 17 European Union countries that use the euro.

The European Central Bank said Thursday that loans to non-financial corporations fell by 1.4 percent in November from the year before.

It's a sign that businesses remain reluctant to take on risk and borrow, despite the ECB's record low benchmark interest rate of 0.75 percent. The ECB expects the eurozone economy to shrink 0.3 percent in 2013 and only start to recover in the later part of the year.

Howard Archer, an analyst at IHS Global Insight, said the figures indicate "households and firms are reluctant to take on new debt amid weak economic activity levels and still appreciable uncertainty regarding the economic outlook."

[Associated Press]

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