BRUSSELS (Reuters) - Europe is not in danger of a real estate or debt crisis as a result of the rapid rise in European Central Bank interest rates, Economic Commissioner Paolo Gentiloni said on Monday.
The ECB has raised rates by a combined 375 basis points since July to curb inflation which hit double digits last autumn and which the central bank for the euro zone says will take until 2025 to fall back to its 2% target.
This makes borrowing more costly for governments, many of which are already deep in debt incurred to support economies during the pandemic and through a cost-of living crisis caused largely by Russia's invasion of Ukraine.
It also raises the costs of servicing mortgages that are linked to the rate of inflation.
Speaking to reporters before a meeting of euro zone finance ministers that will discuss the European Commission's latest economic forecasts, Gentiloni said some countries could face difficulties, but not the 27-country EU as a whole.
"The housing sector creates different problems in different countries - it depends on the nature of ... how much you have systems of mortgage connected or not connected to inflation,' Gentiloni said.
"In a few countries we will face difficulties, but overall I don't see a European crisis from this point of view and I'm not seeing any real European difficulties in terms of management of the debt.
"Yes, interest rates are increasing the cost of the debt, but this is happening in a limited and perfectly manageable way," he said.
The Commission forecast earlier on Monday that growth this year and next in the 20 countries sharing the euro would be slightly stronger than expected in February even if inflation stays higher for longer, and that public debt will fall.
Michael McGrath, the finance minister for Ireland, which went through a real estate crisis more than a decade ago, also said there were no signs of a crisis in the property market as demand was being upheld by a rise in population.
"That is not a concern in the Irish context," he said.