Latest data on interest rates (covered here: http://trueeconomics.blogspot.ie/2014/05/952014-cost-of-credit-in-ireland-kept.html) and credit outstanding in the Irish banking system shows continued deleveraging in the economy:
At the end of Q1 2014,
- Total volume of loans outstanding declined 5.6% y/y,
- Loans to Households were down 1.54% y/y and
- Loans to NFCs were down 9.29%.
- Loans for house purchases were down EUR1.46bn,
- Households' overdrafts rose EUR1.39bn, while
- Consumer credit loans were down EUR1.43bn.
- NFCs overdrafts fell EUR2.81bn and
- Non-overdraft NFCs credit fell EUR5.2bn.
So credit available to enterprises and households in Ireland is still falling. More significantly, households are accumulating overdraft liabilities. And the cost of these facilities is rising.
Not a good sign, suggesting households and corporates are being squeezed on both ends of the debt deflation pump.