New data from KfW Research shows that new business lending in Germany grew by only 0.8% year-on-year in the second quarter of 2025. Adjusted for inflation, this represents a decline in real terms. Analysts attribute the weak lending figures to ongoing economic challenges and the impact of US tariffs on German businesses.
The report raises questions about whether the period of moderate credit growth has already ended. While there has been a notable drop in loan interest rates since early 2025, which could slightly increase demand for corporate finance, strict lending standards by banks continue to limit growth.
KfW Research suggests that only minor increases in lending should be expected for the third quarter unless economic conditions improve significantly. "The significant drop in loan interest rates since the start of the year will likely raise demand for corporate finance slightly in spite of the weak performance of the economy. The strict lending standards being applied by banks, however, will continue to act as a dampener, so that only minor lending growth should be expected in the third quarter. New lending could grow more strongly, however, if the economy brightens with the fiscal package in the fourth quarter."