2023-05-21 10:53:00
Will the economic crisis soon be behind us? Our purchasing power is indeed starting to increase again, in particular thanks to the indexation of wages, while the prices of energy and real estate are falling. However, for many Belgians, the situation is still critical. Some have the impression that purchasing power is only going down despite their best efforts. What gives this feeling so different?
Invited on the set of It’s not every day on Sunday, Sofie Merckx rightly points to the price of food shopping. “250 euros for a shopping cart is huge”, underlines the group leader in the Chamber for the PTB. It is estimated that between 20 and 30% of our expenses are dedicated to food. And the products in the supermarkets are constantly increasing…
Questioned by Christophe Deborsu, the chief economist at Belfius, Véronique Goossen, explains: “The situation is good, but we can expect a slowdown in the economy, because we are fighting inflation, which is quite high. And one of the consequences of that is the slowdown economy, not a recession.”
According to the National Bank of Belgium, the purchasing power of Belgians should increase by 5% during the period 2023-2025. “It’s a catch-up effect”for Bertrand Candelon, economist at UCLouvain. “It’s a positive effect of purchasing power, but there is nevertheless a cloud: any way out of the crisis causes problems. For example, an increase in interest rates which can be problematic, whether for our finances and state financeshe warns.
Interest rates, the hot topic of the week
And it’s true that interest rates are somewhat the subject of the week. How to explain that the interest rates on savings books bring so little money to people (between 1 and 1.5%) while the interest rates on mortgage loans bring a lot to banks (between 4 and 5%)? “It’s a legitimate question”concedes Véronique Goossen, who gives us some explanations: “You should know that there are two balance sheet parts in a bank. A ‘loan’ part and a ‘deposit’ part. And the difference between the two is the interest rate margin.”
In short: the current mortgage loans give very low remuneration to the banks, because loans have been granted at very low rates in recent years. It is therefore necessary to wait for new loans at higher rates to be granted to customers, so that the remuneration of the banks is higher. This will balance the margin on what is possible to give on savings accounts and in loans. “It’s going slowly because the demand for credit has dropped at the moment”, slips however the chief economist at Belfius. Customers are, in fact, currently rather reluctant to take out loans.
Will interest rates finally go up for savings books? “I don’t know”replies Véronique Goossen frankly. “But we’re reviewing. We’re reviewing every month, but you have to be careful.”
Money will cost more
Economist Bertrand Candelon warns: “For the first time in 10 years, we are going to have positive real rates.” That is, interest rates will be higher than inflation. Result ? Money will cost more and this will have an impact on real estate and investments. “It’s a risk. It doesn’t mean it’s going to happen, but you have to take that risk into account”he concludes.
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