Business financing habits in Lithuania differ from the EU average
As the autumn season begins, it is worth looking back at the past year and seeing which financing sources were most relevant to Lithuanian businesses at that time. A survey on companies’ access to finance conducted by the European Commission and ECB from August to October 2025 showed a quite distinct feature of Lithuanian business – our companies are much more likely than the EU average to use their own funds. During the survey, 130 Lithuanian and more than 7,500 EU companies were asked which financing sources they have used or would consider in the future.
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Own funds – for example, retained earnings or income from asset sales – were indicated by 51% of Lithuanian companies. The EU average was 29%, and by this indicator Lithuania ranked second in the EU, behind only Malta. For comparison, in Latvia 40% and in Estonia 33% of companies indicated own funds.
Bank financing was somewhat less relevant to Lithuanian businesses than the EU average. Bank loans as a used or considered future financing source were indicated by 39% of Lithuanian companies, compared to 43% in the EU. An even more pronounced difference is seen when evaluating credit lines and other short-term bank financing – in Lithuania, 35% of companies indicated this, while in the EU it was 48%.
A similar trend is seen regarding grants and subsidized loans – 25% of Lithuanian companies named them as relevant financing sources, compared to 36% in the EU. Meanwhile, equity capital was almost twice as relevant to Lithuanian businesses as the EU average – it was indicated by 27% of Lithuanian and 14% of EU companies.
Interest rates are rising, but the borrowing environment remains favorable
This autumn, company decisions are likely to be shaped by several main factors – interest rates, geopolitics, inflation, and demand. Although base interest rates in the eurozone are rising, the borrowing environment remains favorable for now. At the beginning of the year, base interest rates were 2%, in July the ECB raised them to 2.25%, and the market currently estimates a 99% probability that they will be raised again on September 10 – to 2.5%.
Interest rate changes are also visible in Euribor indicators. At the beginning of the year, the 3-month Euribor was 2%, now it is about 2.6%, and a level of 2.8% is forecast for December. At the same time, inflation in the eurozone is accelerating again – in August it reached 3.3%, the highest since September 2023. So far, it is mainly driven by energy prices, but our observed leading indicators also show accelerating wage growth. This may increase pressure on service prices and become another argument for the ECB to raise interest rates in September.
Gas prices are already posing risks to some industries
The geopolitical situation remains unstable and complicates business planning. Tensions over Iran fluctuate, so businesses may have to operate for some time in an environment of higher energy prices.
Although oil prices remain high, gas prices in Europe currently cause greater concern for companies. The TTF gas price is 73 Eur/MWh – the highest level since January 2023. Our calculations show that this price already poses challenges to the furniture, wood products, textiles, chemicals, and plastics sectors. If gas prices rise to 80 Eur/MWh, the Lithuanian paper industry would also face difficulties.
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Price pressure is also increased by relatively low gas reserves. According to the European Association of Gas Infrastructure Operators “Gas Infrastructure Europe,” European gas storage is currently 65% full, while at the same time in 2023 and 2024 it was 93%. As European energy companies rush to replenish reserves, the EU may have to compete with Asia for gas, which could keep prices high.
Demand is recovering, but geopolitical uncertainty remains
Demand prospects are currently more favorable for Lithuanian exporters. The latest GDP data and leading indicators show that economic growth in the eurozone is accelerating. In Germany, it is the fastest since the third quarter of 2022, and the economic cycle is strengthening in Scandinavian countries as well. This is favorable for Lithuania’s industry and transport sectors, which generate a significant share of the country’s GDP and also stimulate domestic consumption.
When assessing Germany’s prospects, it is worth pausing separately on politics – last Sunday’s elections in the country ended with a historic opposition victory, and the ruling parties’ positions weakened. However, the financial markets’ response was restrained – the election result was essentially priced in beforehand. In market forecasts, the opposition’s victory in Saxony-Anhalt was considered the baseline scenario well before the vote and was predicted with an average 65% probability, so Sunday’s news provided investors with little new information.
This is also seen in prices: on the first trading day after the elections, Germany’s DAX index fell by only 0.15%, while the mid-cap MDAX, more sensitive to domestic market and political news, even rose by 0.15%. The yield on 10-year German government bonds rose by 4.6 basis points to 3.38%, but the next day most of this change was reversed, returning to 3.36%. In other words, the markets treat the election result as confirmation of what was already known, not as a new risk – at least for now.
After the market-expected base interest rate increase to 2.5%, we believe the ECB will not rush to raise them further, even if inflation accelerates somewhat. The eurozone economy is recovering, but the economic cycle remains weak, so the ECB will have to consider not only inflation but also the economic cycle in its interest rate policy.
The greatest uncertainty this autumn is posed by the prospects of the US-Iran conflict. Very different scenarios are possible – tensions may continue, but an agreement cannot be ruled out, after which ship movements through the Strait of Hormuz would intensify, and oil and gas prices would significantly decrease. Predicting how the situation will develop is difficult today, so Lithuanian businesses should plan their actions considering positive, baseline, and negative conflict scenarios.
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