Survey on the Access to Finance of Enterprises: firms report lower interest rates amid reduced need for bank loans

14 April 2025

• Firms reported declining interest rates on bank loans, while indicating a slight further tightening of other lending conditions.
• The bank loan financing gap remained almost unchanged, with firms reporting a reduced need for such loans alongside a slight decrease in availability.
• Firms’ one-year-ahead median inflation expectations decreased slightly to 2.9%, down from 3%, while median inflation expectations three and five years ahead remained unchanged at 3.0%.

In the most recent round of the Survey on the Access to Finance of Enterprises (SAFE), covering the first quarter of 2025, euro area firms reported a net decrease in interest rates on bank loans (a net ‑12%, compared with a net ‑4% in the previous quarter), suggesting that monetary policy easing is being transmitted to firms. At the same time, a net 24% (a net 22% in the previous quarter) observed increases in other financing costs (i.e. charges, fees and commissions) (Chart 1).

In this survey round, firms indicated a reduction in the need for bank loans (net ‑4%, unchanged from the fourth quarter of 2024, Chart 2). At the same time, firms reported broadly stable availability of bank loans (a net ‑1%, down from a net 2% in the previous quarter). This left the bank loan financing gap – an index capturing the difference between the need for and the availability of bank loans – broadly unchanged (a net ‑1%, after a net 1% in the previous survey round). The current composite financing gap indicator – which includes bank loans, credit lines and trade credit as well as debt securities and equity – is reaching levels historically associated with periods of monetary policy easing. Looking ahead, firms expect a modest improvement in the availability of external financing over the next three months.

Firms continued to perceive the general economic outlook to be the main factor hampering the availability of external financing, as in the previous survey round (a net ‑21%, compared with a net ‑22%). A net 7% of firms indicated an improvement in banks’ willingness to lend (down from a net 8% in the previous survey round).

A net 6% of firms reported an increase in turnover over the last three months, unchanged from the previous survey round, with a significantly higher percentage of firms becoming optimistic about developments in the next quarter (a net 30%, up from a net 11%). More firms saw a deterioration in their profits compared with the previous survey round (a net ‑16%, down from ‑14% in the previous survey round). The survey indicates that the net percentage of firms reporting rising cost pressures had also increased over the past three months.

Firms’ expectations of selling prices over the next 12 months were unchanged, while expectations for wage costs slightly decreased, driven by lower expected pressures in the services sector (Chart 3). On average, firms’ selling price expectations remained unchanged at 2.9%, while the corresponding figure for wages was 3.0% (down from 3.3% in the previous round). At the same time, firms signalled a slight increase in other production costs (4%, up from 3.8% in the previous round).

Firms’ inflation expectations for the short term slightly decreased, while remaining unchanged at longer horizons (Chart 4). Median expectations for annual inflation one year ahead declined by 0.1 percentage point to 2.9%, while those for three and five years ahead saw no changes, standing at 3.0%. For inflation five years ahead, fewer firms reported balanced risks (30%, down from 33% in the previous round). A higher percentage of firms is seeing risks to the five-year-ahead inflation as being tilted to the upside (55%, up from 51% in the previous round), which was mirrored by a decline in the proportion of those perceiving risks to the downside (14%, down from 16%).

The report published today presents the main results of the 34^th round of the SAFE survey for the euro area. The survey was conducted between 10 February and 21 March 2025. In this survey round, firms were asked about economic and financing developments over two different reference periods. Around half of firms were asked about changes in the period between October 2024 and March 2025. The remainder, all from the 12 largest euro area countries, were asked about changes in the period between January and March 2025. Additionally, firms also reported their expectations for euro area inflation, selling prices, and other costs. Altogether, the sample comprised 11,022 firms in the euro area, of which 10,167 (92%) had fewer than 250 employees.

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