Euro area loans to firms and households continue to rise gradually, according to recent data from the European Central Bank (ECB). In November 2025, the annual growth rate of the broad monetary aggregate M3 increased to 3.0 per cent, up from 2.8 per cent in October. This modest rise reflects a general uptick in lending as the economy continues to stabilise.
Trends in Money Supply Growth
The ECB reported that the narrower monetary aggregate M1, which encompasses currency in circulation and overnight deposits, experienced a slight decline in its annual growth rate, falling to 5.0 per cent in November, down from 5.2 per cent the previous month. Meanwhile, short-term deposits other than overnight deposits, classified as M2 minus M1, saw an annual contraction of 0.8 per cent, an improvement from the sharper decline of 1.8 per cent noted in October.
Marketable Instruments and Contributions to M3 Growth
Marketable instruments, which are captured in M3 minus M2, exhibited a positive annual growth rate of 1.6 per cent, a slight increase from 1.4 per cent in October. In terms of contributions to overall M3 growth, M1 accounted for 3.2 percentage points, reflecting a slight moderation from the previous month. This was counterbalanced by the improvements in short-term deposits, which contributed negatively at minus 0.3 percentage points, better than the minus 0.5 percentage points recorded in October.
Household and Corporate Deposits on the Rise
When examining deposit-holding sectors, household deposits saw an annual growth rate rise to 3.3 per cent in November, increasing from 3.0 per cent in October. Non-financial corporations followed suit, maintaining a steady growth rate of 3.4 per cent. In contrast, deposits from investment funds, excluding money market funds, experienced a notable slowdown, with their growth rate plummeting to 0.5 per cent in November from 2.7 per cent in October.
Claims on the Private Sector Contribute to M3 Growth
The ECB’s analysis of M3’s counterparts revealed that claims on the private sector made the most significant positive contribution, adding 3.2 percentage points to M3 growth, an increase from 2.7 percentage points in October. Net external assets also contributed positively, rising to 1.9 percentage points from 1.7 percentage points the previous month.
Steady Growth in Claims on Euro Area Residents
The total claims on euro area residents saw an upward trend as well, with an annual growth rate of 2.6 per cent in November, up from 2.3 per cent in October. This growth was led by an acceleration in claims on the private sector, which rose to 3.4 per cent, compared to 2.9 per cent in the prior month. The adjusted loans to the private sector—excluding loan transfers and notional cash pooling—likewise expanded at a rate of 3.4 per cent, up from 3.0 per cent.
Household and Corporate Loans Reflect Economic Stability
Within the category of adjusted loans, households experienced a slight increase with a growth rate of 2.9 per cent year on year in November, a marginal rise from 2.8 per cent in October. Loans to non-financial corporations noted a more substantial increase, growing at a rate of 3.1 per cent, up from 2.9 per cent the month before. This steady growth in lending to both households and businesses suggests a gradual recovery in economic conditions across the euro area.
