Berlin: Germany’s sagging construction sector should face an upswing thanks to additional European Central Bank (ECB) interest-rate cuts, according to Vice-Chancellor Robert Habeck.
“The building industry is weakening and in a slump – too little new construction is taking place,” he said in Holzminden in Lower Saxony on Monday. “This can be resolved by the ECB lowering rates again and then construction will again ramp up.”
Speaking to workers at the headquarters of Stiebel Eltron – which makes heat pumps – Habeck acknowledged that ECB policymakers decide independently on any lowering of borrowing costs, adding that “we all assume that they will” and referencing expectations of two or “maybe even three” moves this year.
“If interest rates go down, then commercial banks will cut rates,” he said. “There are all these construction loans that are on hold: they had planned with a base rate of 0% and suddenly it was over 4.5%.”
The ECB tightened rates at a record pace between July 2022 and September 2023. — Bloomberg
