As production has declined considerably over the past year, firms may have delayed or cancelled investment projects, and thus reduced their demand for new loans. Similarly, households may think twice about major purchases as job prospects have become more uncertain. Compared with past downturns, the recent developments in credit flows seem to be in line with historical regularities.
I will touch upon a few related developments: •  Unit labour costs are increasing at a relatively fast pace in those euro area economies which started at significantly lower price and cost levels.