Eurozone banks unexpectedly tighten firms’ credit standards

Eurozone banks have unexpectedly tightened corporate credit standards at the end of 2025, raising concerns about investment and economic activity ahead of the ECB's interest rate decision. The ECB's Bank Lending Survey indicated that banks' lower risk tolerance and economic outlook contributed to this tightening. While lending trends suggest a neutral impact from looser monetary policy, there was a slight increase in companies' demand for credit, primarily for inventories and working capital. The region's economy grew by 0.3% in Q4, exceeding expectations, but uncertainties from trade policies remain a risk.