The European Central Bank published the second-quarter 2026 Survey on the Access to Finance of Enterprises, showing a further tightening in euro area firms’ financing conditions, led by higher bank borrowing costs and continued pressure on small and medium-sized enterprises. A net 42% of firms reported higher interest rates on bank loans, up from 26% in the previous quarter, while the bank loan financing gap widened marginally to a net 3% as financing needs rose slightly and perceived loan availability remained weak overall. SMEs continued to report declining loan availability, while large firms reported some improvement. The survey also showed that the general economic outlook remained the main factor weighing on external finance, with a net 29% of firms saying it had worsened financing availability. Firms used funding mainly for inventories and working capital, followed by fixed investment. Bank loan applications rose to 23% from 21%, while reported financing obstacles stayed low at 5%. On the operating side, turnover improved and investment increased, but profits continued to deteriorate and material, energy and labour costs remained elevated. Looking ahead, firms expect only a marginal further decline in external financing availability, more moderate increases in selling prices, input costs and wages, and broadly stable inflation expectations, while ad hoc survey questions showed planned AI investment is mostly expected to be financed through internal funds and that the war in the Middle East is pushing up cost and price expectations while weighing on demand and margins.
European Central Bank2026-07-20
European Central Bank survey shows sharper rise in euro area firms' borrowing costs and a slightly wider financing gap
The European Central Bank’s latest SAFE survey shows euro area firms faced tighter financing conditions in the second quarter of 2026, with a net 42% reporting higher bank loan interest rates and the bank loan financing gap edging up to a net 3%. SMEs remained more constrained than large firms, even as loan applications increased and financing obstacles stayed low. Firms also reported stronger turnover and investment, but continued cost pressure and only marginally weaker expected access to external finance.