Closing the credit gap in Europe

In the recent European Credit Risk Survey conducted by FICO and Efma, credit risk managers across Europe said they expected the “credit gap” between demand and supply to narrow, compared with their outlook earlier this year. More risk managers now see the amount of credit issued rising. Nearly 30 percent of responders expect consumer and small business credit approval rates to rise.

The gap may take longer to close for small businesses than consumers. About 60 percent of respondents expect small businesses to request a great amount of credit in the next six months, but only 43 percent think the total amount extended will grow.

While that may not sound like good news for small businesses, the bright side is that both amounts — credit requested and credit extended — are expected to be higher in the coming period than in the previous one. This suggests that government stimuli and bank programmes aimed at rejuvenating this segment of the economy will pay off — albeit more slowly than some would desire.