EU banking regulations could cost 440,000 construction jobs
14 June 2022
The European Construction Industry Federation (FIEC) has voiced concerns over EU reforms intended to mitigate risk within the international banking sector.
The Basel lll agreement requires banks to maintain certain levels of capital, as well as leverage. The agreement was made as a response to the financial crisis of 2007-2008.
In a press release, FIEC has stated that these stricter capital requirements for banks could be damaging for the European construction industry.
Among its concerns, FIEC said the move could reduce the capacity of companies to invest in construction projects at a time when more investment is required, particularly to ensure more sustainable methods of construction.
FIEC said the possible consequence of introducing stricter capital requirements for banks could be to make it “impossible to reach the climate targets”.
Other possible repercussions of the agreement, said FIEC, could include a reduction in the capacity of small and medium-sized firms to access financing for their day-to-day operations – crucial while materials prices are so high and more sustainable practices are also demanded of them.
Ultimately, said FIEC, implementation of the Basel lll agreement could result in a reduction in the number of projects throughout Europe, with, according to one estimate, the loss of as many as 440,000 construction and construction-related jobs.
FIEC is calling for a number of measures to mitigate the impact of the agreement, and an impact assessment, to consider financing needs, given recent disruptive events on the market.