Businesses in the euro area reported a further tightening in bank financing conditions in the third quarter of 2026, while inflation expectations increased substantially, new data from the European Central Bank has found.
The ECB’s latest Survey on the Access to Finance of Enterprises surveyed 12,822 enterprises across the euro area, of which 93% employed fewer than 250 people.
As it noted, the further tightening of financing conditions was common to both small and medium-sized enterprises and larger companies.
Only 4% of euro-area firms were classified as ‘financially vulnerable’, unchanged from the previous quarter. The proportion was 5% among large firms and 3% among SMEs.
Production and labour costs
Companies continued to identify production and labour costs and the availability of skilled workers as their principal constraints. Some 63% of firms rated production and labour costs as a major concern, while 61% cited the availability of skilled labour.
‘In addition, firms were concerned about finding customers (52%) and about competition (43%). Across size classes, large firms tended to be more concerned than SMEs about production and labour costs (69% versus 60%),’ the ECB noted.
More than a quarter (26%) of firms cited access to finance as a ‘key issue’ facing their business, with more large firms indicating this as a concern than SMEs (29% versus 24%).
Inflation expectations
The survey also showed a change in inflation expectations. Among firms that participated in both the second and third-quarter surveys, median expectations for euro-area inflation one year ahead remained at 3.0%. Three-year expectations increased to 3.2% from 3.1%, while five-year expectations increased to 3.1% from 3.0%.
For the full third-quarter sample, however, the median one-year inflation expectation rose to 4.0% from 3.0%. Median three-year and five-year expectations both reached 5.2%, compared with 3.0% and 3.1% respectively in the previous comparable survey.
Elsewhere, around two thirds (65%) of firms perceived upside risks to their five-year-ahead inflation outlook, the ECB noted, compared with 25% that considered risks balanced and 9% that saw downside risks.
The ECB added that the findings should be interpreted carefully because the composition of the survey sample changed substantially – as it noted, first-time respondents accounted for the majority of the latest sample. Read more here.
