The key facts

  • Experts at the Athens summit advise caution with major purchases and loans
  • Rate forecasts are unreliable: 'they promise cuts, and then they rise again,' says Janet Legge
  • Businesses are advised to hedge; Ralph Kesten (cflox) sees more solutions for liquidity

Uncertainty makes planning difficult

Rising living costs, volatile energy prices and more expensive borrowing have made even short-term financial planning difficult for millions of Europeans. The problem, as Euronews notes, is not only the higher prices but also the fact that consumers find it hard to assess what comes next. These issues were discussed at the sixth international HAT International Treasury Summit in Athens, organised by the Greek Treasury Association, where Euronews spoke with financial risk management experts.

Wait or act?

Janet Legge, deputy executive director of the UK-based Association of Corporate Treasurers, believes caution is justified given the current unpredictability of the international situation. Asked what she would advise someone considering starting a business or making a major purchase, she replied: 'I think we need to watch developments for some time and be quite cautious right now.' For a household, she suggests starting with basic questions: how necessary these expenses are, whether they can be covered without depleting savings, whether a loan will be needed and what share of income the payments will make up, as well as what would happen if income temporarily fell or mandatory costs rose.

Why rate forecasts are unreliable

The trajectory of interest rates is one of the main sources of uncertainty, especially for those with loans or considering new borrowing. Speaking about the UK, Legge noted that rates were expected to fall, but the experience of recent years shows how easily forecasts collapse: 'In recent years we constantly hear that rates are about to fall, and then they rise again.' In her view, volatility is likely to become part of the 'new normal': 'They will go up and down, and we will have to adapt.' For borrowers, the key question is how their contract is structured: fixed or floating rate, when it is reviewed and how much the monthly payment could change.

How to protect the family budget

Gilles Bon-Long, a leader in corporate treasury management, links the pressure on the cost of living to international geopolitical events and warned that, in the short term, living expenses may continue to rise. His main advice to consumers is 'careful expense management': systematically tracking monthly spending, planning purchases more carefully and distinguishing mandatory expenses (housing, energy) from those that are easier to adjust.

What businesses can do

For companies, uncertainty affects not only product prices but also financing costs, raw material supplies and the ability to plan investments. Bon-Long emphasised the importance of hedging strategies — financial contracts that limit the impact of changes in rates or prices. 'From a corporate point of view, it is important to have hedging policies to limit exposure to rising floating interest rates,' he explained. Such instruments include interest rate swaps, which allow floating interest payments to be exchanged for fixed ones, and similar strategies for commodity prices. A more optimistic assessment came from Ralph Kesten of the German company cflox, which specialises in working capital management: according to him, high rates and the series of crises in recent years have raised operating costs and put pressure on companies' liquidity, but more solutions are now available. 'We see prices rising, but there are also solutions that can help companies and avoid placing excessive burden on consumers,' he said.

Planning amid uncertainty

Experts agree on one thing: uncertainty requires preparation. For consumers, this means a clear picture of their finances and caution about the commitments they take on; for businesses, early identification of risks and planning of actions. In Janet Legge's formulation, the main question is how long one can wait before confidently making the next decision. In a period of constantly changing conditions, she believes, the answer lies neither in rushing nor in endless postponement, but in the ability to make decisions based on sufficient information, realistic planning and enough flexibility to adapt when facts change.