Experts: European Economy Stuck Between Stagnation And Cheap Loans
The European Central Bank has been struggling with stagnation for many years, but some experts believe that the set of measures that it can take has been almost exhausted.
The credit problem is especially acute for small and medium-sized businesses, which make up more than 99% of non-financial corporations in Europe. Almost three quarters of their external financing comes from banks.
In the Eurozone, estimates of the financing gap for medium and small businesses over the past four years have fallen markedly, from 6 to 3% of GDP. Now this figure is €400 billion. The changes are associated with record low rates on bank loans, as well as with the expansion of lending, which is facilitated by the increased support of the European Central Bank, in particular, the growth of credit provision in countries such as Germany, France, Belgium and the Netherlands.
The largest gap between the demand for bank loans and supply is observed in the Netherlands (22% of GDP), followed by Belgium (14%), France (9%) and Italy (4%). Moreover, the level of credit security is growing most actively in France, the Netherlands and Germany.
Most often, small and medium enterprises in Greece complain about problems with obtaining loans (every fourth company). Italy, Ireland and France also occupied prominent places in the anti-rating.
One of the last record lower interest rates was the rise in property prices, which in some European cities reached a critical level.
“The first danger is that the real estate market will continue to rise and housing prices will create a bubble effect. The second danger is associated with the influence of low interest rates on pension fund liabilities. Low rates are a signal to the financial market that the authorities should invest more in the Netherlands, especially in education, science and alternative energy sources, » says Bas Jacobs, Professor of University of Rotterdam Erasmus.
That is why the European Central Bank urges countries with large budget surpluses, just in the Netherlands, to invest more in their own economy in order to stimulate economic growth in Europe.