Euro Area Banks Tighten Lending Amid Trade Uncertainty

European Central Bank economists have found that euro area banks tightened lending conditions in 2025 due to growing trade uncertainty.

The analysis, published by Anastasia Allayioti and her team, examined corporate loan data and bank survey responses to assess lenders' reactions to rising trade risks.

The study revealed that firms involved in international trade faced greater uncertainty due to changing trade policies, including broad-based tariffs imposed in 2025.

The ECB found that euro area banks generally faced greater risks from companies exporting to the United States than from firms importing US goods and services.