European business activity continued to recover, with turnover improving better for large companies than for small and medium-sized enterprises, according to the European Central Bank for International Access to Finance (SAFE) survey. Bank for the period from October 2021 to March 2022.
However, corporate profitability declined due to the surge in production costs, with 89% of companies announcing, in pure terms, an increase in raw material and energy costs and 66% in labor costs. Both categories have climbed to historic highs in the history of research, according to the ECB.
At the same time, the central bank warns that the impact of supply disruptions and higher energy costs is expected to continue to affect prices. Fifty-eight percent of companies surveyed by the ECB said inflation was now a “very important” factor, up from 30% in 2020.
In terms of access to finance, a significant number of Eurozone companies reported a tightening of financial conditions, with 34% pointing to increases in bank interest rates from just 5% in the previous survey.
For the foreseeable future, businesses are expecting a worsening of access to bank loans and credits for the first time since the outbreak of the COVID-19 pandemic.
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Source: Capital

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