Our companies’ high leverage ratios not only reflect the fragility of Portugal’s economic fabric (as firms are particularly vulnerable to changes in financing conditions), but also reflect strategic weakness (because high indebtedness limits the ability of firms to respond to changes in the external environment, jeopardising their growth potential).
In a housing market where values have declined so much, following a period in which all actors relied upon rising house prices to sustain mortgage practices, foreclosures simply do not make sense as a preferred response. Foreclosures are costly to all parties and more broadly to our economy.