Across Europe, households and businesses are wrestling with a familiar but stubborn problem: prices remain high, interest rates are volatile, and planning even a few months ahead feels like guesswork. The question of whether to make a major purchase, start a business, or take on new debt has become fraught with uncertainty.
At the sixth HAT International Treasury Summit in Athens, organised by the Hellenic Association of Treasurers, financial risk management experts offered practical guidance for navigating these turbulent conditions.
Caution before commitment
Janet Legge, deputy chief executive of the UK-based Association of Corporate Treasurers, which represents professionals managing corporate money and risk, advised a measured approach. "I think we need to watch developments for a while and be somewhat cautious at the moment," she said, pointing to unpredictable international developments.
For households, she suggested asking a few basic questions before any significant expense: How essential is it? Can it be covered without exhausting savings? If borrowing is required, what share of income will repayments take? And what happens if income temporarily drops or essential costs rise?
Interest rates: forecasts are fragile
The path of interest rates remains a key source of uncertainty, especially for those with loans or considering new debt. Speaking about the UK, Legge noted that rates were expected to ease, but recent experience shows how easily forecasts can be overturned. "In recent years we keep hearing that interest rates are about to fall and then they go back up again," she said.
She expects volatility to become the norm. "They will go up and down, and we will have to adapt." For borrowers, the critical question is how their own contract is structured: fixed or variable rate, adjustment frequency, and the potential change in monthly repayments.
Protecting the household budget
Gilles Bonn-Long, an executive in corporate cash management, links cost-of-living pressures to geopolitical developments and warns that living costs could continue to rise in the short term. His main advice is "careful management of spending"—tracking monthly outgoings systematically and planning purchases more deliberately. Distinguishing between essential expenses like housing and energy and those that can be adjusted is also useful.
For those concerned about energy costs, recent developments in Europe show how governments are responding. For instance, France has tapped strategic diesel reserves to reduce pump prices, while EU leaders have sought quick fixes as energy prices spiral.
What businesses can do
For businesses, uncertainty extends beyond product prices to financing costs, raw material supply, and investment planning. Bonn-Long stressed the importance of hedging—using financial contracts to limit the impact of interest rate or price changes. "From a corporate perspective, it is important to have hedging policies in place to limit exposure to rising variable interest rates," he explained. Instruments like interest rate swaps allow businesses to exchange variable payments for fixed ones, and similar strategies can mitigate commodity price swings.
A more optimistic view came from Ralf Kesten of the German company cflox, which specialises in working capital management. He acknowledged that higher interest rates and successive crises have pushed up operating costs and squeezed liquidity, but he believes more solutions are now available. "We are seeing prices rise, but there are also solutions that can help companies and prevent consumers from being excessively burdened," he said.
Planning for uncertainty
Experts agree on one point: uncertainty demands preparation. For consumers, that means a clearer picture of their finances and caution about new commitments. For businesses, it means identifying risks early and planning responses.
Legge posed the central dilemma: how long can we wait before feeling confident enough to act? In a period of constant change, she said, the answer lies neither in rushing nor in postponing everything. It lies in making decisions based on adequate information, realistic planning, and enough flexibility to adapt when circumstances shift.
As the IEA warns of potential diesel price climbs and Germany's tobacco tax hike illustrates, price pressures are not easing uniformly. The ability to adapt—both at the kitchen table and in the boardroom—remains the most valuable financial skill.
