Download Debt crisis hits Europe`s retail credit markets

PRESS RELEASE
Sovereign debt crisis hits Europe’s retail credit markets
The European Credit Research Institute (ECRI) has just published its 2012 Statistical Package, a comprehensive collection of data
on lending to households, covering all European countries and other major global economies for the period 1995-2011.
The main findings of the Statistical Package 2012 are that:
1. Household deleveraging has started on the EU level
In 2011, the stock of loans to EU households decreased by 1.1% in real terms for the first time in decades, continuing the
stagnation observed since the beginning of the financial crisis. Seventeen states registered a reduction in the stock of loans in real
terms, with only Malta and Luxembourg experiencing increasing growth rates in their retail credit markets.
2. Peripheral countries register record levels of household deleveraging, while core countries remain stable
Greece, Ireland, Spain, and Portugal registered record negative growth in their stock of household loans, whereas core Euro Area
(EA) countries demonstrate no significant deleveraging. A similar dichotomy emerges among the new member states (new MS).
Figure: Real growth rates of total household debt between 2004 and 2011 (chosen regions):
1)
Czech Republic, Poland, Slovenia, Slovakia
2)
Bulgaria, Estonia, Lithuania, Latvia, Romania 3)Greece, Ireland, Portugal, Spain 4)Austria, Finland, France, Germany, Luxembourg, Netherlands
3. Household deleveraging is driven by pre-crisis credit expansion rather than current household debt levels
The extent of deleveraging in separate countries is significantly correlated with the country’s credit expansion prior to the financial
crisis, but is only weakly linked to current household debt levels. This suggests/means? that the trend in deleveraging is mainly
caused by the pre-crisis credit expansion and does not follow a significant convergence path.
4. The pace of deleveraging underlines lack of medium-term consumer confidence
In addition to a third consecutive year of negative year-on-year growth in EU-27 consumer credit, housing loans and other loans to
European households have declined in real terms for the first time since the crisis. Given the naturally higher rigidity of housing
loans and their longer maturities, this pace of deleveraging is likely to reflect households’ downward-revised expectations about
Europe’s medium-term recovery.
5. Deleveraging of non-financial companies reflects low business confidence in Europe’s periphery
In 2011, the loans to non-financial companies increased in real terms for the first time since 2008 in the EA core and in new
member states. However, corporations in countries hit by the sovereign crisis and by austerity measures continue to deleverage
significantly, raising worries about a flight of capital , under-investment and future growth in Europe’s periphery.
The Statistical Package provides in-depth, annual analysis of various issues regarding lending to households,
- presents absolute as well as relative measures,
- gives a thorough breakdown of credit data by maturity and currency,
- differentiates by type of credit and lender (for selected countries),
- states figures in euro as well as national currency and
- allows analysis of time series in nominal and real terms.
ECRI is an independent, non-profit research institute whose researchers and academic partners have developed a specialised body
of knowledge on retail financial markets. It provides in-depth analysis of the structure, evolution and regulation of retail financial
services markets in Europe. ECRI’s operations and staff are managed by the Centre for European Policy Studies (CEPS).
CEPS is an independent, Brussels-based think tank dedicated to producing sound policy research leading to constructive solutions
to the challenges facing Europe. For the last two years, it has been ranked among the top ten think tanks in the world.
For further information, contact:
Ales Chmelar + 32 2 229 39 87 [email protected] or Elina Pyykkö + 32 2 229 39 83 [email protected]