2023-09-15 07:29:42
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To fight inflation, the European Central Bank has just decided to once once more increase its main interest rate. Rates are now at their highest since 1999, which will continue to have a direct impact on credit granted to businesses and households.
Published on 09/15/2023 09:29 Updated on 09/15/2023 10:14
Reading time: 2 min The headquarters of the European Central Bank in Frankfurt (Germany). (/NCY / MAXPPP)
For businesses, credit is investment. However, the number of loans granted, particularly to SMEs, is at its lowest level in 20 years (2003). Not because the banks refuse to lend the money – even if they are increasingly cautious – but it is the demand that is falling. With high interest rates, borrowing is expensive and business leaders are reluctant to take out credit, they wait for better days. Which is a big problem at the moment, because companies need to invest to modernize their production tools and decarbonize their activity, they are falling behind.
The impact of rising rates also concerns households
For individuals too, the monetary tightening of recent months has led to a surge in borrowing costs. Direct impact: credits increasingly expensive to repay and increasingly difficult to obtain. Many households are postponing their investment plans in real estate, which creates other problems, linked in particular to the mobility which generally accompanies professional and family projects.
Building professionals warn
Rising interest rates are a scourge for home builders. The entire sector is feeling the effects and professional federations are warning of the devastating effects of the crisis which is growing. Housing shortage and job destruction. The president of the Federation of Real Estate Developers, Pascal Boulanger, estimates that 300,000 jobs are threatened by 2025: 150,000 in construction, to which must be added 150,000 in everything that revolves around it (developers, design offices). , etc.). The question is to what extent, and until when, the ECB will use its monetary policy to fight inflation despite the already very heavy collateral effects.
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