INTERNATIONAL BANKING
Forecast for
Eurozone 2014
business lending
drops by €211 billion
European SME’s need capital, “but banks will struggle to
provide it this year”.
This year the Eurozone will experience annual gross domestic product
(GDP) growth for the first time since 2011. However, at just 0.9% the
growth will not be strong enough to support a level of uplift in financial
services that will drive further economic recovery, according to The EY
Eurozone Financial Services Forecast (EEFSF). The growth in business
lending has been revised significantly down, with €211 billion less to be
lent in 2014 than previously predicted in October. Consumer credit is also
flagging – it shrank by €29 billion in 2013, as households felt pressure
to reduce their debt in the face of high unemployment. The forecast for
consumer lending in 2014 has dropped by €26 billion, and consumer
credit will not recover to 2012 levels until 2016.
The outlook is more balanced for financial services sectors outside
banking. Assets Under Management (AUM) will continue to rise, hitting
€5 trillion for the first time this year. However, low economic growth,
low inflation, and historically low interest rates will limit the scope for
further gains.
Business investment combined with a more cautious attitude from
banks towards lending, means that business lending is now expected
to grow by just 1.6% in 2014, instead of 3.8% as previously estimated.
Consumer credit forecasts have also fallen significantly.
Robert Cubbage, Banking and Capital Markets leader for EY in Europe, )5