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Economic Challenges: Inflation, Rising Wages, and Business Investment Plans in 2024

According to quarterly barometer Challenges-Meti-banque Palatine, a majority of business leaders (50.9%) have revised their investment plans downwards, or planned to do so. It is true that the share of those who see their financial costs increase is now nearly 75%, compared to 68% during the September 2023 survey. For Frédéric Coirier, CEO of the Poujoulat group and co-president of the Mouvement des enterprises de size intermediary (Meti), “this is particularly worrying, as we face a real wall of investment to carry out the major transformations that our economy urgently needs”.

Wage spirals

As we know, the dilemma facing the European Central Bank is delicate, because inflation, even if it has calmed down, is still very present in the economic statistics (3.7% at an annual rate in France, 2 .9% in the euro zone) and in the concerns of our entrepreneurs. “The second round effect”, that is to say the spiral linking the rise in the price index and the increase in the wage bill, is on everyone’s minds. The increase in energy bills is also cited among the main “economic difficulties” of the moment. Despite this context, notes Patrick Ibry, deputy general manager of the Palatine bank, the companies in the panel demonstrate great “resilience”: 70% expect an increase in their turnover this year.

Inflation and rising wages: Europe falls into the “second round” trap

Bank tap open

Other good news: unlike real estate credit for individuals, the bank credit tap has not dried up for businesses. According to the same survey, 87% of companies obtain a “favorable response” from their banking partner to their financing requests. The previous quarter this rate was 80%. Another one investigation, conducted this time with a panel of 1,472 very small businesses (VSEs), reaches the same conclusion: credit is still there, with 70% of requests granted. The cash flow tension is however strong, since 88% of the credits requested in 2023 by VSEs – 43% of them used them – were aimed at alleviating short-term financial difficulties. The Union of Independents and Small Businesses (SDI) is less optimistic than Meti. According to this organization, “morale is at its lowest for the start of 2024”.

2024-01-18 07:47:38
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