The weak trend that continues to characterize household consumption in the euro area is one of the most evident manifestations of a situation that is struggling to recover, seven years after the outbreak of the crisis. In 2013 the index of effective final consumption, the indicator suggested by the Stiglitz, Sen, Fitoussi report to measure the material well-being of individuals, was below the 2008 level in eleven EMU countries, while the recovery recorded in the remaining economies it was minor.
Compared to 2008, in 2013 the most significant spending cuts were made by households in Greece and Cyprus, followed by those in Portugal, Italy and the Netherlands. In general, compared with the maintenance of basic necessities (food, home, health and education), there is a reduction in expenses for transport, communications, furnishings and leisure time. For several euro area countries, the forecast of incomes in 2016 still lower than those of 2008 makes a robust recovery in consumption problematic.
Among the negative effects of the reduction in household purchases is the contraction in consumer credit. Last October, the stock of this type of loan in the euro area amounted to 569 billion, the same amount as in May 2006. In Italy, the decline in consumer credit (-3,4% y/y in June) was matched by a change in the characteristics of the contracts: between 2007 and 2013 those of small amounts with low monthly installments and short-term contracts which also present lower risk rates increased.
Positive indications come from disbursements: the negative trend that characterized flows from the last quarter of 2007 ended in February. In the twelve months ending in October, new loans recorded an annual growth of 10,6%, strengthening compared to previous months.
Attachments: Focus no. 41- 12 December 2014.pdf
