Bert Colijn, Senior Economist at ING, reports that the latest Eurozone bank lending survey suggests a decreased demand for borrowing and tightening credit standards for businesses. This implies a subdued start to the economic recovery from an investment perspective and is in line with the ECB's low tolerance of rising yields, he adds.

"Eurozone's bank lending survey showed that demand for borrowing among eurozone firms has decreased in the first quarter."

"Banks indicated the weakness among firms’ demand was mainly related to delayed fixed investment plans due to protracted lockdowns."

"Banks also tightened credit standards for businesses and plan to do so again in 2Q, which means that investment recovery could take a while to pick up even when businesses indicate interest in borrowing once economies reopen."

"Today’s bank lending survey results will make it to Christine Lagarde’s desk ahead of Thursday’s ECB meeting and add to the picture of an accommodative ECB for now."

"Tightened credit standards for businesses make for a slightly more modest rebound outlook for now, which puts the eurozone further away from a quick recovery to pre-pandemic output levels. That is in line with the ECB's low tolerance of increasing bond yields until growth prospects recover."