ECB Survey: Euro-Area Firms Face Sharply Tighter Lending Costs in Q1 2026
Interest-rate burdens and financing fees rose markedly, while one-year inflation expectations jumped to 3.0% partly driven by the Middle East war.
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Euro-area firms reported a sharp rise in the cost of bank borrowing in the first quarter of 2026, according to the European Central Bank's Survey on the Access to Finance of Enterprises (SAFE). A net 26% of respondents said interest rates on bank loans had increased, up from 12% in the previous quarter, while a net 37% flagged higher charges, fees, and commissions, compared with 28% in the fourth quarter of 2025.
The bank-loan financing gap — the difference between firms' need for credit and their perceived access to it — remained positive at 2%, down slightly from 3% in the prior round. Firms cited the general economic outlook as the primary constraint on external financing, with that net reading rising to 26% from 20%.
Profits continued to deteriorate, with a net 16% of firms reporting lower earnings versus 10% in the previous quarter. Turnover growth slowed sharply, with only a net 1% of firms recording an increase, down from 7%.
Firms' one-year inflation expectations rose to a median of 3.0%, up from 2.6%, with the Middle East war cited as a driver of higher selling-price and input-cost projections. Expected input costs, including energy, jumped to 5.8% from 3.6%, while wage expectations eased slightly to 2.8% from 3.1%. The share of firms reporting upside risks to five-year inflation expectations climbed to 65% from 56%.
The survey covered 10,544 euro-area firms between 19 February and 1 April 2026, with 92% of respondents classified as small or medium-sized enterprises.