The European Central Bank has said that banks in the Euro zone have tightened access to credit for companies by the largest amount since the 2011 debt crisis.

The quarterly Banking Lending Survey conducted by the ECB has found that banks are increasingly pessimistic on the economy with rising funding costs and a looming recession.

Some 26 per cent of banks surveyed said that they have tightened their loan approval standards in the last quarter of 2022.

The survey also found that credit standards were tightened for consumer credit and mortgages. Banks expect this trend to continue through the first quarter of 2023.

ECB policymakers are likely to advocate for smaller rate hikes in the coming months when they stage a policy meeting later this week.

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