Financial Report for the year I 956

Abstract

The general economic expansion in the countries of Western Europe that characterized the situation in the preceding year has continued also in 1956. This expansion had several common aspects for the six countries of the Euro-pean Coal and Steel Community; the development, however, was not exactly alike in each of the countries or in each sector of their economies. At closer view it appeared that the expansion has been retarded to a growing extent by the shortage of man-power and long-term capital. In the financial field the favorable general expansion has lead to a consider-able increase of demand for long-term capital which in its turn has further aggravated the tension already existing in the capital markets. This aggravation of tension coincided in some of the countries with governmental and central bank measures aiming to check inflationary trends. The shrinkage of capital supply has naturally contributed to a slackening of the pace of expansion, especially towards the end of the year. Under such circumstances the industries, especially the coal and steel industries, have found it difficult to procure themselves to a sufficient extent with long-term financing and for such funds that they were able to find they had to agree to abnormally high interest rate_s.