Euro area firms report tighter credit access and stable inflation outlook
Companies in the euro area reported a tightening of bank lending conditions and an increased financing gap in the fourth quarter of 2025. The latest SAFE survey also found largely unchanged inflation expectations and widespread, albeit moderate, use of artificial intelligence.
Credit costs rise, financing gap widens
In the fourth quarter of 2025, euro area companies reported a significant tightening of bank lending conditions, according to the latest Survey on the Access to Finance of Enterprises (SAFE).
Net 12 percent of firms indicated an increase in bank loan interest rates, up from 2 percent in the previous quarter.
Other financing costs, including fees and commissions, also rose for a net 28 percent of companies, compared to 23 percent previously.
While collateral requirements saw a less pronounced increase (net 14 percent, down from 16 percent), overall credit terms became more stringent.
Concurrently, firms reported a slight increase in their demand for bank loans (net 3 percent, up from 0 percent) alongside a perceived decrease in availability (net -2 percent, from -1 percent).
This resulted in a wider financing gap for bank loans, increasing to a net 3 percent from 1 percent in the prior quarter.
Looking ahead, companies expect the availability of external financing to remain largely unchanged over the next three months.
Inflation outlook stable, AI adoption moderate
Companies' inflation expectations remained largely stable across all time horizons.
The median expectation for annual inflation in one year edged up slightly to 2.6 percent from 2.5 percent, while expectations for three and five years held steady at 3.0 percent.
A net 56 percent of firms continued to report upside risks to their five-year inflation outlook.
The survey also explored the use of artificial intelligence (AI), finding that 27 percent of euro area companies do not use AI, 33 percent use it very rarely, 31 percent moderately, and 7 percent extensively.
SMEs are more likely not to use AI compared to large firms (35 percent versus 13 percent), though the share of companies using AI extensively is similar across both groups.
Credit crunch persists, growth outlook mixed
The continued tightening of credit conditions and widening financing gap signal persistent headwinds for euro area firms.
Despite stable inflation expectations, the mixed outlook for sales and profits suggests the economic recovery remains fragile.
The widespread but largely moderate AI adoption points to untapped productivity potential and a digital divide.