Overview of the European consumer credit market in 2013: Loan outstandings in Northern and Continental Europe*: +2% Southern Europe*: -7%
- In 2013, consumer loan outstandings declined in the European Union by 0.9% to €1,061 billion.- Marked differences between European countries.- The French market ranks third in the European Union, with an outstanding level of €146 billion.- Russia and Turkey: new buoyant markets just outside Europe.
For the seventh consecutive year, Crédit Agricole Consumer Finance is publishing its survey of the consumer credit market in the 28 European Union countries.
Relatively weak outstandings
The consumer finance market has been contracting continuously in the European Union since 2008. In 2013, outstandings declined by 0.9% to €1,061 billion, compared with 6.8% growth in the world market.
The ratio of consumer loan outstandings to household final consumption in the European Union has been declining for the past four years, from 17% in 2009 to 14% in 2013, even though household consumption has increased in value (+1% in 2012 and +2% in 2013). The consumer credit is an important driver of local economic activity. Thus, for the top 5 European markets of consumer credit (UK, Germany, France, Italy, Spain), loan outstandings represent a significant share of Gross Domestic Product (GDP): 8% in Germany, 7.3% in France and 14% in the UK. Loans outstandings also correspond to a significant share of household consumption: 14.6% of the consumption of German households, 12.8% in France and 21% in the UK. Chantal Ledemé, Head of Strategic Development at Crédit Agricole Consumer Finance, commented: "Consumer spending is the highest contributor to domestic demand and plays a vital role in GDP growth. But households have revised their consumer spending projects and gradually reduced their recourse to credit as a result of the economic crisis and their assessment of their financial position and budget. This continued decline in credit penetration has led to a decrease in outstandings per inhabitant".
Since 2010, outstandings per inhabitant in the Eurozone countries has contracted by more than 2% a year on average, to €2,100 at the end of 2013. "This decline is due to a move by European households to reduce their debt, particularly in the Southern European countries. There are several reasons for this: first a lack of household confidence in countries with a continued high unemployment rate, and secondly, a restriction in credit supply following the new financial constraints imposed on banks under Basel III rules", added Chantal Ledemé.
The Northern and Continental European countries* account for 58% of outstandings at €617 million but 41% of the European population. Unlike other European countries, outstandings continued to grow by an average of 2% in 2013", explained Chantal Ledemé.
- The Northern and Continental European countries* reported higher average outstandings per inhabitant than other countries: almost €3,000 on average, €4,100 in the UK, €3,700 in Luxembourg and €3,300 in Denmark. The UK, Europe's largest market with €260 billion of outstandings, stands apart from the other major European economies with 5% growth in outstandings. Germany reported a slight decrease in outstandings in 2013 (-1% to €223 billion) but is still the second largest market in Europe ahead of France (€146 billion), Italy (€107 billion) and Spain (€68 billion). The Netherlands has a low consumer credit penetration rate at 9%. In 2013, outstandings declined by 6%, although Dutch households still have high mortgage levels (130% of disposable income).
- The Southern European countries* reported a sharp decline of 15.6% in average outstandings per inhabitant to €1,820 in 2013, accompanied by a decrease in consumer finance penetration to 13% from 12% in 2012. Southern Europe reported a 7% decrease in consumer loan outstandings in 2013 (-2% in France, -3% in Italy, -6% in Greece and -10% in Portugal).
- Central and Eastern European countries* saw a decline of 4.7% in average outstandings per capita to less than €680. This area accounts for just 8% of consumer loan outstandings but 21% of the European population. There were marked differences in outstandings by country. In Latvia and Slovenia, outstandings were down -33% and -11% respectively compared with growth of 5% for Slovakia. Poland is the largest market in this area with €31 billion of outstandings in 2013 and €817 in outstandings per inhabitant, down -5%.
New buoyant markets just outside Europe
For the first time, Crédit Agricole Consumer Finance has extended its survey of the consumer credit market beyond the 28 European Union countries, to include Turkey and Russia. The consumer finance market in these two countries is in a catch-up phase and has been growing at a rate of more than 20% a year since 2010. Outstandings per capita, at €1,200, are close to that of Spain or the Netherlands (€1,500) and grew rapidly in 2013 (+31% for Turkey and +26% for Russia).
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