Mark Veldon, UK Country Co-Leader and Co-Leader of EMEA Private Equity at AlixPartners, comments on the European Central Bank’s (ECB) rate decision:

"After much discussion about the extent to which rates will be cut this month, the European Central Bank (ECB) has announced another rate reduction at its final meeting of 2024. This brings rates down to 3% as part of the bank’s slow-and-steady approach to cutting rates without triggering market instability. This strategy is critical to ensuring a stable transition as the bank works to manage inflationary pressures while safeguarding economic growth.
 
“Volatility in the wider European economy still persists, as seen in The Organisation for Economic Cooperation and Development (OECD)’s revision of its economic growth forecasts for Germany and France. The German economy is now expected to grow by 0.7% next year, down from a previous forecast of 1.1%, suggesting that core inflation remains a concern for some countries. However, its unlikely to become a systemic issue for the euro area. 
 
“Today’s decision marks a turning point, bringing borrowing costs to their lowest since March 2023 – a moment investors have anticipated since the ECB kicked off its rate-cutting cycle in June. This move offers a much-needed boost to private equity activity across European markets. However, with the geopolitical landscape evolving, investors are likely to tread carefully and prioritise strategic long-term plans over impulsive moves. While cheaper borrowing costs are welcome, we can’t lose sight of the short-term headwinds that persist.”