This is the result of two ongoing trends. One is the increasing convergence among euro area countries across a range of indicators. The dispersion of both employment and GDP growth between euro area countries is now at record low levels. The previous divergence in credit conditions has also largely disappeared.
For very small loans – which are a proxy for the financing conditions facing SMEs – the spread between vulnerable and less vulnerable countries has fallen from 170 basis points in mid-2014 to 2 basis points today. For the first time since 2009, loans to firms are moving into positive territory in all major euro area economies.