Good News out of Europe

May 1, 2014
An increase in European lending activity is good news for the global economy.

The European Central Bank (ECB) announced that business and non-business loan activity increased in the first quarter of 2014, and concurrently, an easing of lending standards in European Banks. The increase in loan demand was small at 2.0%, but a whole lot better than the -11.0% of the last quarter of 2013.

The willingness of European businesses to take on debt is a very encouraging sign in terms of increased business spending and thus more fuel for the economic recovery. This may seem to be dry economic fare, but a healthy Europe is good news for the US and global economy. Note also that it occurred despite the tensions occurring in the Ukraine.

The increased demand by businesses and consumers for loans will also help ease the deflation fears in the eurozone. The rate of inflation is mild at 0.7%, but it remains positive, and that is also good news for the eurozone’s economic health. Increased demand for goods and services as a result of the increase in borrowing should also help the employment picture, and this will hopefully begin a virtuous cycle that will help the EU weather the economic rain squall anticipated later this year as the US faces some headwinds.

The numbers are small, but they are encouraging. Now would be an excellent time for your firm to follow suit if you have not already done so. Develop growth strategies, borrow some money to finance both the growth and increased efficiencies, and get ready to grow.

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