Revealed: Europe’s debt problem revealed

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A new study finds that people in Europe with debt will struggle when interest rates rise, with pessimism highest in Romania, Turkey and Spain. 

According to the ING International Survey Savings 2018, a survey now in its seventh year which covers 15,000 people across 13 countries in Europe as well as the USA and Australia, about one in three (34 per cent) people with debt admit they are in this fragile position.

Last year the Bank of England (BoE) raised rates for the first time in 10 years – from 0.25 per cent to 0.5 per cent. However the European Central Bank (ECB) has been reluctant to increase rates yet, opting in January 2018 to leave its benchmark interest rate unchanged at 0.0 per cent. 

Lack of savings

The latest research reveals that just over a quarter (26 per cent) of households across Europe have no savings at all. 

Across Europe, the highest shares of people with no savings are in Romania (36 per cent) and Germany (29 per cent); with Belgium, Poland and the UK next (27 per cent each). Luxembourg finished top - with only 13 per cent of people saying they have no savings. Luxembourg also has the highest GDP per capita across the 15 countries surveyed.

Debt and financial trouble

Over the last 12 months financial regulators have warned about the perils of rising unsecured consumer debt. 

ING’s latest survey on savings looks at types of consumer debt and finds that the most common form, excluding mortgages, is a personal loan from a bank or other financial services provider. Across Europe, the share who have a personal loan, on average, is 23 per cent. 

Exceptions to this rule are Turkey (51 per cent), USA (40 per cent), Australia (30 per cent) and the UK (27 per cent), which all have much larger shares with credit-card debt than who have personal loans. In Turkey, about half (51 per cent) say they have credit card debt. Personal credit-card accounts often have high interest rates, which can cause hardship for consumers who fall behind on payment.

Something hidden away

ING’s research also delves into couples’ relationships with money.

The study finds that three per cent of Europeans who define themselves as part of a couple have a money secret they’ve kept from their partner. One in five (21 per cent) indicate they might hide some spending, savings or debt from their partner, though, in some circumstances.  

When asked, coupled-up people in Europe with money secrets have a range of reasons for doing so – including not wanting their partner to know how much they spent (16 per cent) or wanting to keep debt secret (9 per cent).

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