Intrum’s annual European Consumer Payment Report reveals that consumer spending confidence has fallen to “record-low levels”.
The UK debt purchase and collection firm surveyed over 24,000 consumers in an attempt to gauge consumer spending habits in the midst of economic turmoil, with inflation soaring in many of the major countries within the continent.
Intrum found that three in 10 are expected to miss one or several utility bills in the upcoming year, with a further eight in 10 admitting that they are worried about rising grocery and energy prices.
The next 12 months have been highlighted as a precarious situation for consumers, with one in three believing they will not have enough money to pay their bills over the next year, with a similar proportion stating that they have already missed a bill in the last year.
Andrés Rubio, President and CEO of Intrum, commented on the report findings: “After many years of low inflation and loose monetary policy, soaring prices and rising interest rates have made European consumers deeply pessimistic about the future.
“Many consumers who were relatively unaffected during the pandemic are today feeling the impact. The cost shocks will have a significant impact on consumer spending patterns, increasing the risk of default on lower priority obligations.”
Consumer worries may also be passed down to affect creditors, despite BNPL solutions becoming the go-to payment model to cover growing costs, more people are missing out on payments highlighted by the figure that an increasing amount of consumers are missing payment deadlines on bills.
The younger generation has gravitated towards BNPL providers the most, with 31% of ‘Gen Z’ respondents stating they are increasingly likely to use the services.
In light of the European Consumer Payment Reports release, UK inflation has just risen to 11.1%, the highest since 1981. Prime Minister Rishi Sunak attributed much of the rise to Russia’s invasion of Ukraine whilst speaking at the G20 Summit in Bali.
Consumers believe that high inflation won’t be disappearing anytime soon, with more than half of consumers surveyed expecting inflation to continue for “years”, with growing fears over future saving plans and pensions will not be sufficient enough.
Intrum have suggested that a method to combat the rising prices is to increase household incomes, as three in 10 respondents state they plan to ask for a pay raise soon.
Rubio concluded: “Although we have not yet seen the ‘doom loop’ of a wagering-price spiral in Europe, the relatively high shares saying they will demand a pay increase indicates that consumers’ patience with falling real wages is diminishing.
“This will focus even more attention on central banks’ ability to control inflation.”
