“As confidence in Europe’s economy grows, the European Central Bank’s decision to cut rates by another 0.25% to 2% was widely expected. With inflation now standing at just 1.9%, anything other than a modest rate cut by the ECB would have been a bold decision.
“Unlike the uncertainty gripping the UK and US markets, the ECB has taken a steadier approach by gradually lowering interest rates throughout its easing cycle. This has delivered a clear win for private equity and M&A. Lower borrowing costs mean cheaper financing options, boosting deal flow and improving returns. Coupled with the recent decline in inflation, these factors create a more conducive environment for deal-making and value creation. With that said, the landscape remains volatile and subject to change. Companies and investors must, therefore, plan for all possible scenarios while taking advantage of the current climate.”