During the latest stock market slump, European companies could at least draw comfort from one thing: their high cash balances. But the fears about growth and sovereign debt that are spooking markets are also likely to make companies even more risk averse. If that means they continue to hoard cash, it would help embed the weak growth outlook.

Corporate bond issuance has ground to a halt this summer, while the net proportion of eurozone banks reporting an increase in loan demand slumped to 4% in the second quarter from 19% in the previous three months, according to the European Central Bank.