Category: 3. Business

Developing Asia reached a 98% access rate in 2024. India and Indonesia now have universal access, leaving most of the remaining gap in Pakistan, Afghanistan, Mongolia, Myanmar, and the Democratic People’s Republic of Korea, which together account for 83% of the region’s population still without electricity. Progress has stalled since 2021, with four of the five countries showing slower progress than before the pandemic.

Latin America is close to universal access, with 98% of the population connected in 2024. But the last few percentage points are proving difficult. Remote areas such as the Andean Highlands and the Amazon remain underserved, and at the current pace, it could take 15 years to close the gap. Honduras and Haiti face the largest challenges. In Haiti, about half the population still lacks electricity, and progress in 2024 was 56% below the 2015–2019 average.

Sub-Saharan Africa accounts for eight out of ten people globally without electricity. The number of people lacking access grew between 2020 and 2022 but has since begun to fall, though progress is concentrated in a handful of countries such as Côte d’Ivoire, Kenya, and Mozambique. In 2024, regional progress remained below pre-pandemic levels, with 27 countries still lagging their 2015–2019 averages. Early 2025 estimates suggest a modest acceleration, supported by record solar PV imports from China and new electrification policies in key countries.

Pubs and bars in England and Wales could see extended opening hours as the government launches a fast-track a review on “outdated” licensing rules.

The plans could make it easier for venues to serve food outside and host more live music, in a bid to “remove unnecessary barriers”.

Pub landlords and local communities will be able to have their say in a four-week call for evidence. Prime Minister Sir Keir Starmer said the review was about “cutting red tape” and “boosting footfall” to support the UK’s economic growth.

But critics have warned relaxing rules around alcohol would lead to more antisocial behaviour.

Sir Keir said “pubs and bars are the beating heart of our communities”, and added that the government was “backing them to thrive”.

“When our locals do well, our economy does too,” he said.

The call for evidence will focus on nine key recommendations from the Government’s Licensing Taskforce, with particular emphasis on streamlining on-trade alcohol licensing for hospitality venues.

It said it plans to cut the cost of licensing, extend business rates relief and cut alcohol duty on draught pints.

Nick Mackenzie, co-chair of the Licensing Taskforce and chief executive at pub giant Greene King, said updating the licensing system was a “vital step” towards reducing the challenges of running a hospitality business.

“Pubs are faced with continued rising costs, placing them under enormous pressures which is why the Government must continue to back the sector, including critical reforms on business rates which would unlock opportunities for pubs to invest and help drive economic growth,” he said.

Dr Richard Piper, the chief executive of the charity Alcohol Change UK told the Guardian the proposed reforms would be a “charter for chaos” without support from local authorities and health experts.

He said permitting vendors to sell alcohol later into the evening would “inevitably mean more victims of crime, including domestic violence, more antisocial behaviour and disturbance, more police time spent dealing with drink-fuelled incidents and both ambulance and A&E staff having to deal with even more people who have come to harm as a result of alcohol”.

Pubs in England and Wales do not have universal fixed opening hours under current licensing rules. Instead, local authorities grant licenses with specific operating hours which pubs must follow.

The number of pubs in the UK has steadily decreased every year since 2000, according to the British Beer and Pub Association. The association estimates that 378 pubs would close in 2025 across England, Wales and Scotland, amounting to more than 5,600 direct job losses.

A breakthrough in sustainable transmissions: Valeo remanufactures the complex DQ250 dual wet clutch, which is fitted to more than 5 million vehicles in Europe.

This milestone marks the completion of a project led by The Future is NEUTRAL and its subsidiary THE REMAKERS, to develop a competitive circular offering with low environmental impact.

This new offering reduces the price by 30% compared to the equivalent new product and consumption of natural resources by at least 45%.

A strategic partnership and a unique training program to prepare the 140 automotive expertise firms in the LIDEO network for tomorrow’s innovations.

Icare, a subsidiary of BNP Paribas Cardif, brings its expertise in warranty extension and automotive maintenance contracts. Stellantis’ Spoticar label, launched in 2019, offers a range of warranties and services for used vehicles, aiming to strengthen customer trust and facilitate transactions. Through this partnership, BNP Paribas and Stellantis are strengthening their collaboration, creating new opportunities for customers and dealers.

This partnership covers an extended range of insurance products and services for the benefit of dealers and buyers of used vehicles. The agreement includes specific warranties for used cars, such as warranty extensions, maintenance contracts, and dealer guarantees. Dedicated offers for electric vehicles with battery coverage are also planned.

Dealers and customers will also benefit from a claim reporting and management platform, as well as digital tools such as online training modules, sales support, and a unified partner portal integrating tools to prepare and resell vehicles. Technical and commercial support will also be provided on the ground to help with integration and performance monitoring.

by Kārlis Vilerts, Sofia Anyfantaki, Konstantīns Beņkovskis, Sebastian Bredl, Massimo Giovannini, Florian Matthias Horky, Vanessa Kunzmann, Tibor Lalinsky, Athanasios Lampousis, Elizaveta Lukmanova, Filippos Petroulakis and Klāvs Zutis^[1]

Merely classifying loans as fixed-rate or floating-rate^[2] fails to fully capture their distinct sensitivity to changes in ECB policy rates. We analysed the maturity of the relevant risk-free rates used to price new loans to see if it affected their short-term interest rate sensitivity – which it did. In countries where new loans were priced using shorter-term risk-free rates, interest rates increased more sharply during the ECB’s monetary tightening, regardless of the loan’s own maturity. This effect was not purely mechanical. Banks partly offset this rise by lowering the premia they charged. By looking beyond headline classifications, we gain a more nuanced understanding of how variations in lending practices drive cross-country differences in monetary policy pass-through.

Beyond fixed and floating

Although the euro area has a single currency and a common monetary policy, lending practices differ between euro area countries in several ways that shape the pass-through of monetary policy. In Vilerts et al. (2025), we study a less explored difference: the maturity of the relevant overnight interest rate swap (OIS) at the time of issuance of new loans. We use data from AnaCredit, a comprehensive euro area-wide loan-level database, covering about seven million new loans issued by banks to non-financial corporations (NFCs) in 2022-23.^[3] This timeframe encompasses the series of post-pandemic rate hikes.

Our preliminary analysis reveals that structural factors, such as loan type, firm size or loan maturity, explain only a small portion of the lending rate differences across euro area countries. This suggests that other loan characteristics may play a more significant role.^[4] In our study, we break the interest rate on individual loans down into a “relevant risk-free rate” and a “premium” – the residual compensating banks for risk. The relevant risk-free rate is that of the OIS. For fixed-rate loans the maturity of the relevant OIS is that equal to the maturity of the loan, while for floating-rate loans it is the maturity corresponding to the loan’s reference rate at origination.^[5] For example, the relevant risk-free rate for a five-year fixed-rate loan is the five-year OIS rate on the issuance date. In contrast, for a five-year floating-rate loan benchmarked against a three-month EURIBOR and adjusted every three months, the relevant risk-free rate would be the three-month OIS rate. The premium is then calculated as the difference between the lending rate and the relevant risk-free rate.

We find striking cross-country variation (Chart 1) in the maturity of the relevant risk-free rates: in countries such as Latvia and Ireland maturities are very short – around six months on average. Meanwhile in other countries, such as the Netherlands, Malta and France, they often exceed five years on average.

Loan characteristics key for pass-through

These structural differences mean that monetary policy transmits with varying strength and speed across the euro area, depending on which segment of the risk-free yield curve dominates local lending. Two key questions emerge. First, to what extent can the cross-country variation in the rise of average interest rates on new loans between early 2022 and late 2023 be explained by differences in the evolution of the risk-free rates used to price NFC loans? And, second, how does the maturity of the relevant risk-free rate affect the pass-through of monetary policy rate changes to interest rates on new loans?

“Before and after” analysis of lending rates

To address the first question, we employ a time-difference approach to analysing changes in interest rate levels. In particular, we compare interest rates – as well as adjustments in the relevant risk-free rates and shifts in the premium – on loans issued in two periods bracketing the 2022-23 tightening cycle.^[6] They are the first quarter of 2022, before the first hike in July 2022, and the fourth quarter of 2023, after the final hike in September 2023. We find that most of the rise in interest rates on new loans during the post-pandemic tightening was driven by increases in the relevant risk-free rate (Chart 2).

Three key observations emerge from the analysis. First, the pass-through of changes in the relevant risk-free rates to changes in lending rates exhibits notable cross-country variation. Some 11 countries experienced an increase in relevant risk-free rates exceeding 4 percentage points, with Latvia and Estonia experiencing the highest increases at 4.37-4.41 percentage points. In contrast, the Netherlands and Malta saw risk-free rates rise by only 2.85 percentage points. Second, the distinction between fixed and floating-rate loans does not always provide a clear explanation for the observed patterns. For the relevant risk-free rates the change was particularly pronounced in countries like Latvia and Ireland, where floating-rate loans with short fixation periods are more prevalent. Similarly, a strong contribution of relevant risk-free rates was observed in Italy, despite its higher reliance on fixed-rate loans which tend to have shorter maturities. Third, a large increase in the relevant risk-free rates does not necessarily result in the largest increase in lending rates. In several countries, the rise in relevant risk-free rates was offset by a decline in the premium, which moderated the overall increase in lending rates.

Pass-through of monetary policy rates to lending rates

We then turn our attention to loans issued near ECB Governing Council meetings and use a stacked time-difference regression (following Bredl, 2024)^[7] instead of a simple before-and-after comparison. Specifically, we examine how the pass-through of monetary policy rate changes varies across loans priced off different maturities of relevant risk-free rates, now using the full set of actual changes in the policy rate, instrumented by high-frequency surprises (Altavilla et al. 2019). As shown in Chart 3, the pass-through from monetary policy rates to lending rates strengthens as the maturity of the relevant risk-free rates shortens.

However, applying this approach to the components of interest rates shows that this mechanical pass-through is not the only factor at play, as we see adjustments in premia smoothing differences in pass-through across loan categories. We find that premia increased less for loans linked to shorter maturity risk-free rates, which partially offsets the differences in the aggregate pass-through to lending rates.

There are several possible explanations for this pattern. On the lender side, repricing of loans can at times outpace the pass-through to funding costs, improving net interest income and creating scope to lower premia on new loans – especially for those priced off short-term reference rates. On the borrower side, tighter policy can alter the composition of lending and firms may substitute borrowing across maturities and rate types. Overall, the evidence points to systematic smoothing effects: premia adjustments dampen differences in loan rate changes. This suggests that the variation reflects pricing within the bank rather than shifts in the banks doing the lending.

Loan pricing design matters for monetary policy

Our results point to several important implications for monetary policy. First, loan pricing design matters for monetary policy transmission. Markets where lending is tied to shorter maturities exhibit stronger and faster transmission. Second, loan premia also adjust independently of exogenous factors. When short-term rates move sharply, banks reprice loan premia over the relevant risk-free rate in ways that smooth differences across loans priced off different maturities. Recognising this interaction helps explain cross-country differences during tightening episodes and anticipate how the composition and pricing of new credit respond to policy.

References

Altavilla, C., Brugnolini, L., Gürkaynak, R.S., Motto, R. and Ragusa, G. (2019), “Measuring euro area monetary policy”, Journal of Monetary Economics, Vol. 108, Issue C, pp. 162-179.

Bredl, S. (2024), Regional loan market structure, bank lending rates and monetary transmission.

Vilerts, K., Anyfantaki, S., Beņkovskis, K., Bredl, S., Giovannini, M., Horky, F.M., Kunzmann, V., Lalinsky, T., Lampousis, A., Lukmanova, E., Petroulakis, F. and Zutis, K. (2025), “Details Matter: Loan Pricing and Transmission of Monetary Policy in the Euro Area”, Working Papers, No 3078, ECB.