Are households driving Europe’s economic recovery?

The total outstanding credit from MFIs to households and NFCs in 2016 showed an increase of 0.7% in the EU28 compared to the previous year. Private credit to households has entered stable growth for the second consecutive year, which suggests that private credit markets are recovering from the implications of the economic and financial crisis in 2008.

Among credit types, consumer credit experienced the strongest annual growth, while housing loans remained on a slower but steady growth path. The country group of new member states that acceded in and after 2004 constitute an exception, with a housing loan growth more than 2.5 times higher than that of the entire EU28. Whereas private credit continues to grow across all loan types, the growth rate magnitudes are consistently smaller than the 2015 growth rates.

Diverging trends between private and corporate credit on European credit markets continue as credit to NFCs experiences a contraction for the eighth consecutive year, albeit with a smaller magnitude than in the previous year. Annual growth rates at country level show a much smaller variation on a range half as wide as in the preceding year, suggesting that credit markets for NFCs are stabilising and could soon enter recovery as well.

With the exception of Italy, the PIIGS continue to exhibit negative growth rates across all credit types.

Notwithstanding the signs of recovery conveyed by annual growth rates, outstanding amounts across all loan types continue to be well below pre-crisis levels, with the exception of housing loans.