Analysis | What the credit hides

In the years immediately after the financial crisis, institutions such as the International Monetary Fund drew attention to the possibility that many affected countries could embark on an economic recovery without credit (creditless recovery). It was noted at that time that, in fact, one of every five cycles of growth after a recession occurred without a significant growth of credit. Yes, there is less funding also implies an opportunity cost, expressed in an economic expansion at rates moderate.

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Yesterday, the Bank of Spain stated concisely that “the credit to households grew by 0.4% in October in the interannual rate, and the financing of companies by 0.2%”. So expressed, these data suggest that the variation of credit to the domestic economies it is stated (but without harshness) in rates of positive growth since the month of June. For businesses, however, it seems a little more novel, because since January of this same year, there were observed a variation year-on-year positive. But there's a lot more reading behind this headline.

What we could consider as the credit most common reference is still stagnating. For domestic economies, the financing of housing continues to fall (by 1.5% compared to a year). For businesses, loans also fall (by 0.5% in the same period) what is it that Restbet increases then? In the household sector, up “other loans” (6.5 per cent), which, mainly, include the consumption. For corporations, what is increased is the debt, with other companies or with bonuses.

Corollary: the private sector, English is still repaying debt after the binge of the crisis and their current funding is very selective.

The reflection required is how much you could grow in Spain if there were more credit, but that's disquisition requires to establish nuances fundamental. First, is it desirable growth of credit per se? The own demand of loans is limited. There is a certain chill that calls a credit expansion progressive, at all costs avoiding potential bubbles. Precautions, in any case, are still there.

consumer credit is just 5% of private funding but has grown rapidly in recent years, expressing, among other things, the demands of wages and savings post-crisis shrinking. And already take care of the supervisory authorities and regulators to cool even more the credit, with information requirements and granting ever greater. Now, for example, it is argued that the new authority for macro-prudential that you want to launch in Spain to be able to take measures to curb lending in sectors where they observe a certain desboque.

In any case, the market itself will set their limits, because with the cooling-monetary, and the expected rise in rates will be accompanied by a credit necessarily more expensive. There is still some way off, but 2019 may point tentatively in that direction. In November, the euribor to twelve months stood at -0,147%, compared to -0,154% in October. The key is to know when to enter the positive territory, which is understood as “normal”.