The president of the European Central Bank, Christine Lagarde, stressed yesterday that the institution is closely monitoring market developments after the intervention of the Swiss authorities in aid of Credit Suisse and guaranteed that the central bank of the euro zone is prepared to respond “as is needed”.
“We are closely following market developments and are prepared to respond as necessary to preserve price stability and financial stability in the eurozone,” he said in his speech before the European Parliament’s Committee on Economic and Monetary Affairs.
Lagarde “welcomed” the swift action and decisions taken by the Swiss authorities, noting that they were instrumental in restoring orderly market conditions and ensuring financial stability.
As she has been defending in recent days, for Lagarde the banking sector in the euro zone “is resilient”, with strong capital and liquidity positions. And he recalled that the ECB’s toolkit is fully equipped to provide liquidity support to the eurozone’s financial system, if needed, and to preserve the smooth transmission of monetary policy.
the family economy
The increase in mortgages, the increase in the shopping basket and the increase in the basic expenses of any family are beginning to affect the consumption that citizens carry out on a daily basis. Or, at least, in all those items that are more expendable every day in the face of a family budget reduced by inflation: fashion, restaurants, etc. An X-ray of the bank cards used by the majority of Spaniards reveals how consumption with these means of payment began to fall in the second half of February. And it did so with drops of up to 2% in the case of the ‘retail’ category; 12% on transportation expenses; or 14% in tourism (payments at travel agencies or accommodation, among others).
It is the first time since the end of the coronavirus crisis that spending by Spaniards – reflected in credit and debit cards – has decreased compared to the previous year, according to the most up-to-date data provided by CaixaBank Research. And that circumstance has a lot to do with the conditions they have to deal with around them than with a problem, for example, like a job. This is how some analysts, such as Rubén Segura-Cayuela, Bank of America’s chief economist for Europe, explain it: “European households are being squeezed at an unprecedented pace and real consumption growth is turning negative.”
“Consumers are paying much more for the same and we cannot be optimistic about future consumption prospects, because even when the pressure on real income decreases, the effects of higher interest rates will still be felt”, says the expert.
These values of lower consumption of cards contrast with the increases in expenses that these means of payment continue to record in transactions registered in food stores, supermarkets and hypermarkets. That is, in everything related to the shopping cart of each house. In this case, the cards show a consumption increase of 20% during the months of January and February. In fact, weekly data do not indicate that this expenditure has decreased since the beginning of the year, given the impact of food inflation (its rate continues to grow at a rate greater than 15% year-on-year).
The culprit of this situation has its own name and surname: the Euribor. The exponential rise in interest rates approved by the ECB since last summer has considerably increased part of the mortgage payments paid by families. And it did so in amounts that started to rise between 60 and 80 euros, but are now going at a rate of more than 200 euros in many cases.
In fact, those who dare to buy a house will have to allocate, on average, around 40% of their income to pay the mortgage loan installment. That’s almost seven points more than those who took out a loan last year spent, according to calculations made by the financial sector. The fact that most mortgages taken out last year are fixed (in October the percentage of the total fell below 70% for the first time in months) will cushion the impact of the Euribor on current homeowners.