In the next 12 months the fears of many people in Europe are related to overdue payment of their bills, according to the latest European Consumer Payment Report (ECPR). The report reflects moods among more than 24 000 people from 24 European countries. According to the survey 80% of them are inconvenienced by the rising price of groceries and energy costs.
Consumer confidence in Europe has fallen to a new low, many consumers are changing how they spend money and three of ten say they struggle to make ends meet and expect to miss bill payments in the next 12 months. An equally sized share has already missed out on a payment over the past year.
The authors of the report noted that after long years of low inflation and loose monetary policy, soaring prices and rising interest rates today are creating widespread pessimism among European consumers about the future. Many of them, which have remained relatively unaffected by the pandemic, are now feeling the effects. The cost shocks will have a significant impact on consumer spending patterns, increasing the risk of default on lower priority obligations, note the authors.
According to the survey more than 40% of the people are most likely to default on e-commerce and online store bills. Almost 25% will refuse to pay for their internet, an equally sized will skip the phone bill. Only 7% consider that they will miss a mortgage or rent payment in case of difficulties (see the chart). The change in behaviors has already affected more than half of Europeans – 60% say they have already changed how they spend money. Most often reduction is eating out, which badly affects the restaurant sector and all those related to leisure – barely recovering from the crisis of COVID-19. Younger consumers are also feeling the pinch and are more likely to use a variety of buy-now-pay-later products to meet their expenses.
Despite governments’ claim that inflation is temporary, more than half of Europeans believe it will persist for years ahead. Three in ten respondents said they would soon ask for a pay rise to cope with increased costs. The share rose to 41% among the families with small children.
The rising problems with overdue payments are also confirmed by the European Banking Authority data, showing an increase in the share of Stage 2 – potentially problematic. This predicts more late payments in the future, noted ECPR.
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