This companies start being moderate investments before rise interest rates. even if he domestic consumption remains strong, this trend to cut investment is already threatening economic growth prospects. These are the results of an analysis published by Credit and attention and this tends to align with that of most analysts, growing fears of an economic slowdown. The rise in household expenditures, driven by falling inflation and rising wages, cannot alleviate another fundamental situation, which is characterized as a general trend and is shown as an increase in non-payment risks. HE fall in energy prices and the power of consumption does not appear to be sufficient to offset the effects of higher interest rates and tighter credit standards.
According to Crédito y Caución, 46% of Western European companies postponed their investments due to the increased risk of nonpayment of their commercial clients. the latest Payment Applications Barometer The report, published by Crédito y Caución, identified an emerging trend among Western European companies that often delay or halt their investment plans to face the current challenging economic environment. The fact is that the elements that indicate more liquidity crunch and greater risk of bankruptcy.
Postponement or paralysis of investments is the first big sign. financial difficulties and threats to economic growth or business confidence. Companies may be holding back on long-term claims, such as the transition to clean energy, the fight against cyber fraud, or the training of a skilled workforce. According to Crédito y Caución, this trend is in 14 markets covered by its regional barometer (Germany, Austria, Belgium, Denmark, Spain, Finland, France, Greece, Ireland, Italy, Netherlands, United Kingdom, Sweden and Switzerland).
The deterioration in the payment behavior of B2B customers in Western Europe is evident in the barometer. Average 20% increase in late payment volume over the last 12 months: “Late payments affect almost half of all B2B sales on credit in the region, and companies in Western Europe have to wait, on average, a week longer than in 2022 to collect collections.”
Results
Failure or delay in intercompany payments is a common consequence of interest rate hikes. Most companies prefer borrowing through a provider loan rather than sticking to more expensive bank loans. The credit and surety barometer reveals that “providers are less willing to accept commercial loan applications, and there are many companies that don’t see their demands fully met.” The barometer also reflects other concerns such as: effect of persistent inflation, high financial costs And geopolitical tensions. Fear of bankruptcy is particularly high in Italy and the United Kingdom. The barometer reflects new concerns, particularly in Germany and Austria, such as carbon footprint limitations and clean energy storage.
“In this context, the expected bankruptcy level risesThis led to a deterioration in the global commercial credit risk landscape affecting companies in many regions, including Western Europe. This may explain why many companies surveyed in the region have increased their attention to the strategic management of credit risk in B2B commerce, with a significant number of companies confirming that they have taken out credit insurance to mitigate the greater impact of non-payment risk on their businesses. Number of customers, up 15% on average compared to last year,” explains Andreas Tesch, Head of Market at Atradius. Atradius provides trade credit insurance, surety and collection services worldwide with a presence in 50 countries. Catalan West.
For Ben Laidler, global market strategist at multi-asset investment platform eToro,slowdown is comingDue to the lagged effect of 5% interest rates, bank fears and cuts in the debt ceiling”. In recent weeks, experts have been announcing a slowdown in the US economy. possible reduction in interest rates and debt ceiling, economic prospects on a global scale in connection with money escaping from banks to seek new ways of profitability Deposit outflows for money market funds announce uincreased regulatory oversight And Be more careful when lending in the USAbut also in Europe.