Banks still not lending to companies in Europe; recovery subdued

FRANKFURT, Germany—New figures show that European banks are lending less to companies in another sign the continent’s economic upswing remains less than robust.

The European Central Bank reported loans to companies slipped by 3.1 per cent in November from a year earlier.

The drop was sharper than the previous month’s three per cent.

Analysts say some companies are afraid to borrow due to uncertain growth prospects while others are sitting on adequate cash reserves.

The economy of the euro currency union—a bloc that grew from 17 to 18 members in the new year with Latvia’s accession—expanded by only 0.1 per cent in the third quarter last year, with unemployment at 12.1 per cent.

Government efforts to reduce debt by cutting spending and raising taxes have weighed on growth.