The battle of European Central Bank to control inflation has motivated the interest rates go from 0% (July 2022) to 4.5% (this month of September) in just over a year. We have to go back to 2008, when the last economic crisis, to find such high rates and this sharp increase in the cost of money is causing different consequences in the economy. Companies have already raised their voices to warn of their difficulties and this is stated by the general secretary of the Confederation of Businesspeople of Córdoba (CECO), Joaquin Gisbertwho states that “less access to credit has serious consequences for the Spanish productive fabric”, pointing to the “paralysis of direct investment by many companies, dependent in many cases on financing”, and to the “brake on consumption and, therefore, the normal development of business activity”.
Joaquín Gisbert confirms that “companies, especially SMEsblame the rise in interest rates caused by the change in the monetary policy of the BCE», and points out, referring to the surveys of the Bank of Spain, that “access to financing for companies has tightened, caused by a lower risk tolerance of financial entities, especially motivated by economic uncertainty.” Along these lines, regarding the current scenario, he explains that the volume of credit “continues below pre-crisis levels at a time when the lack of liquidity in companies is worsening, also affected by rising inflation and growth. “very important of the prices of raw materials and the high costs of energy.” Along with this, the amount of the value of average credits has also been reduced, which, in his opinion, is “one more example of the difficulties that companies encounter in obtaining sufficient financing.”
The consequences of the rises in interest rates There are multiple and the general secretary of the employers’ association also details that “the increase in the cost of financing produces a negative impact on results, fueling new restrictions to obtain additional financing and with superior guarantees.” Along the same lines, he specifies that “there are also effects on the financing repayment terms, reducing them, making it difficult to make new investments.”
Joaquín Gisbert regrets that the scenario is worsening “due to the effects of the coronavirus crisis, a situation from which many companies have not recovered,” he remarks, and refers to the companies’ over-indebtedness. Added to this is the reduction in margins, “which significantly reduces their liquidity”, and the increase in delinquencies, “which represents a strong financial cost”, he explains.
Thus, as he recalls, business organizations have demanded that the Government of Spain take “actions to moderate inflation, so that all the adjustment initiated in the economy does not fall solely on the private sector.” They ask the Executive for a comprehensive plan to support the company “to alleviate the lack of liquidity” and also demand that access to small and medium-sized companies be facilitated. European funds Next Generation EU“which still do not effectively reach SMEs and which could be used to unblock those paralyzed investments and projects,” says the general secretary of the Córdoba employers’ association.
In fact, the financing granted to Córdoba households and companies is at its lowest level since September 2020, six months after the covid pandemic was declared. The latest data from the Bank of Spain are related to the first quarter of the year (they will be updated this Monday) and indicate that financial entities have granted loans worth 12,341 million euros to families and the productive fabric. This amount represents a decrease of 189 million euros compared to the end of 2022 and also a decrease of 317 million (3% in percentage terms) in the last year. The official statistics, therefore, confirm the closing of the credit tap.
In turn, savings have been reduced in recent months. Although the deposits of homes and companies reached 15,187 million euros last March and this is the second highest figure in the historical series, the amount has fallen by 225 million since December (-1.5%).
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