New data from KfW Research indicates that new lending to businesses increased by 2.9% year-on-year in the first quarter of 2025. This growth comes despite a positive economic environment characterized by early investment activity and favorable loan interest rates, but overall lending expansion remained modest.
The report points to ongoing uncertainty due to US tariff policies, which has led banks to be more cautious and businesses less willing to invest. As a result, banks have adopted more restrictive lending practices. However, KfW Research notes that there are indications of rising financing needs among businesses.
According to the outlook, future growth in new lending could be supported by stimulus from a fiscal package and investments related to the ‘Made for Germany’ initiative. "The expected impetus from the fiscal package and the ‘Made for Germany’ investment initiative of businesses can give new lending a bit of a boost in the near and medium term," KfW Research stated.
KfW Research anticipates that after an expected decline in new lending during the second quarter, moderate growth should resume.