Euro zone SMEs 'starved' of creditFriday 11 October 2013 18.50
Small and medium sized businesses in the peripheral euro zone are being ''starved'' of credit.
They are also paying interest rates on bank loans up to three times more than their German counterparts.
A new study from the Institute of International Finance and consultancy firm Bain & Co also reveals that new lending is down by a half in the last five years, with the Irish slump of 82% the most acute.
New lending volumes tumbled by 66% in Spain, while they fell by 45% in Portugal. Less peripheral states also saw big drops, with French lending down by 37%, while the figure for the Netherlands was down 32%.
The report was published on the fringes of the International Monetary Fund summit in Washington today. It concluded that the hardest hit economies of the euro zone should each form national task forces to deal with the issue.
''SMEs in Europe are starving for the financing necessary to fuel job creation and economic growth," commented John Ott, a senior partner at Bain.
He said that one of the main barriers to better and cheaper credit provision was the lack of information about SME creditworthiness.
Each country should devise its own strategy to improve the flow of information about smaller businesses, and the project should be overseen by the European Commission, he added.
SMEs account for two thirds of employment across Europe.