ECB Release Latest Access to Finance Report for SMEs

Small and Medium sized enterprises (SMEs) in the euro area were less concerned about access to finance in order to grow their businesses, according the European Central Bank’s (ECB), Survey on the Access to Finance of Enterprises (SAFE) report.

Avenues to financing was only the most important issue for 11% from the 11,226 companies who responded for the survey, which was taken for April to September this year.

Finding customers, as in the previous SAFE report, remained the most pressing problem, with 25% concerned about the volume of business that their companies would receive.

The availability of skilled labour, increases in cost and production, competitive pressures, and the presence of regulations completed the list of current apprehensions.

Report Highlights Country Divergence

Unsurprisingly Greek SMEs reported that finance access was the most difficult hurdle  which they faced, with 30% who said that they had experienced problems.

In Ireland and the Netherlands, 13%  revealed that they were most worried about finance.

In contrast only 7% concurred with this in Germany, Austria, and Finland, despite their poor economic growth results throughout this year.

Demand for Bank Loans and Overdrafts Reduced

There was a fall in the amount of SMEs in the euro area who reported that their need for a bank loan had increased, from 3% in the previous report to 1%.

In Belgium, Finland, Germany and Netherlands, there was a fall in SMEs who said that there was a falling need for external finance, amid an environment of strong internal sources of finance.

There was also positive news for the relationship between the banking sector and SMEs, as there was increase in the availability of bank financing

Also, fixed investment and working capital were the two main areas where SMEs used their capital.

Turnover Increase in Euro Area

There was positive news for SME, as the net turnover across the euro area improved by 17%, which was felt across most countries. Greece again suffered the most, recording a turnover decline.

Rising labour and ‘other’ costs were seen as prohibitive by the respondents, as 41% and 34% respectively said that this was an issue, but this was down from the last SAFE report.

In net terms, only 1% of SMEs stated that profits have declined, a significant fall from the 10% from the last report.

Euro Area Inflation Stable

In a flash estimate, the euro area inflation is expected to be 0.1% in November, no change in a month on month comparison to October. 

Food, alcohol and tobacco is having the most positive influence on inflation with a rise of 1.5%, although that is a slight drop of 0.1% from October.

Services prices have also increased by 1.1%, a 0.2% drop month on month, while non energy industrial goods were slightly higher on 0.5% in November, compared with 0.6% for October.

Once again energy prices have has a significant impact on inflation as a whole, with a decrease of 7.3%, although that is a reduction from the minus 8.5% figure for October.

The ECB is highly likely to consider measures to boost inflation at its policy meeting tomorrow.