Experts: Caution Advised as Prices and Interest Rates Stay High
At a treasury summit in Athens, financial risk management experts urged consumers and businesses to act cautiously amid uncertainty. They recommend careful spending planning and, for companies, the use of hedging tools.
The rising cost of living, volatile energy prices and higher borrowing costs are making decisions harder for many Europeans, from major purchases to starting a business. Euronews put these questions to financial risk management experts at the sixth HAT International Treasury Summit in Athens, organised by the Hellenic Association of Treasurers. Their shared conclusion: uncertainty calls for preparation.
Wait or move ahead
Janet Legge, deputy chief executive of the UK-based Association of Corporate Treasurers, which represents professionals managing companies' money and financial risks, says caution is justified because international developments are hard to predict. She advises watching events for a while. For households, that means asking how essential an expense is, whether it can be covered without exhausting savings, what share of income repayments would take if borrowing is needed, and what would happen if income fell temporarily or essential costs rose.
Interest rates
Legge notes that UK interest rates are expected to ease, but recent years show how easily forecasts are overturned. In her view, volatility is likely to be part of the new normal. Borrowers should check whether their contract has a fixed or variable rate, when it is adjusted and how much the monthly repayment could change.
Household budget
Gilles Bonn-Long, an executive in corporate cash management, links cost-of-living pressures to international geopolitical developments and warns that costs could keep rising in the short term. He recommends careful management of spending: tracking monthly outgoings more systematically and separating essential expenses, such as housing and energy, from those that are easier to adjust.
Options for businesses
For companies, uncertainty affects financing costs, raw material supply and investment planning. Bonn-Long stresses the importance of hedging policies, which use financial contracts to limit the impact of changes in interest rates or prices. These include interest rate swaps, which let businesses exchange variable interest payments for fixed ones. Ralf Kesten of German working capital specialist cflox says higher rates and successive crises have raised operating costs and squeezed liquidity, but more solutions are now available.
Legge stresses that the answer lies neither in rushing nor in postponing everything, but in decisions based on adequate information, realistic planning and enough flexibility to adapt when facts change.
