In addition, we need a developed European capital market, which also provides capital to young, ambitious and risk-taking firms in Europe and continues to finance them throughout their growth phase. A functioning capital market is necessary for mastering the enormous challenges facing us today: climate change, digitalisation and demographic trends. The European capital markets union can play a significant role here.
In high inflation environments, firms tend to adjust prices more frequently—otherwise, their prices would quickly fall out of  -4step with their costs and the prices set by other firms.2 This makes it relatively easy for firms to quickly pass on cost changes to their customers.3, 4 In contrast, firms can make do with less frequent price adjustments when inflation is low.