ECB survey signals rising business borrowing costs

In the ECB business survey released on 26 October, a net 46% reported higher bank lending rates, compared with 42% in the previous round. For Hungarian exporters, this provides information about euro-area customers’ financing environment, rather than Hungarian lending-rate statistics.

The release gives a net share: the difference between responses reporting increases and decreases. This indicator cannot be used to calculate a specific loan rate or a Hungarian company’s financing cost.

According to the detailed report, first-time respondents formed a majority of this sample. Fieldwork ran from 26 August to 2 October; some respondents were asked about three months and others about six. This also affects how comparisons should be interpreted.

Our business interpretation is that changes in payment terms deserve particular attention in supplier negotiations. When a customer pays later, the supplier has to finance the same receivable for longer. The survey does not assess any particular Hungarian counterparty’s ability to pay.

Our articles on ECB stress tests and consumer inflation expectations examine risks affecting different participants. The next survey round will be worth watching for whether reports of rising interest costs persist, also taking the composition of the sample into account.

It is therefore useful to compare contractual payment terms with actual receipt dates. Company records can support this check and help distinguish a change in the agreement from a late payment.