U.S. Markets

Germany sees no rise of the 'zombies' despite low rates

FRANKFURT (Reuters) - There is no sign of a rise in the proportion of “zombie firms” in Germany despite low borrowing costs that reduce the incentives for banks to pull the plug on clients in arrears, the Bundesbank said on Monday.

The German central bank has long opposed the ECB’s ultra-easy policy of low interest rates and massive bond purchases, citing the risk that it would keep unviable companies artificially alive, among other arguments.

But it saw no sign of that happening at home, however, putting the share of German firms with a negative cashflow at just 2.2 percent in 2015, barely up from 1.4 percent at the start of the crisis in 2007.

“The proportion of zombie firms out of all companies in Germany is small and has not increased during the period of low interest rates,” the Bundesbank said in its monthly report.

It also said the German economy is expected to extend its brisk momentum into the winter months, while reiterating its view that it may slow down after next year.

Reporting by Francesco Canepa; Editing by Mark Heinrich