A word from the CEO: Hope takes hold

The outlook is distinctly brighter now than it was 12 months ago, when we published our last European Consumer Payment Report.

With most adults in the EU now fully vaccinated against Covid-19, the economic recovery appears at last to be taking hold. Some economists suggest that European businesses are ‘roaring back’ and outpacing the recovery in China and the US. 

At the time of writing, there are many reasons to be hopeful. Still, it would be premature to believe that the crisis is over. The recovery is, for example, arriving for some consumers and some regions faster than it is for others. We also do not know how evolving challenges – including supply chain bottlenecks, rising energy prices, and the emergence of new strains of the virus – will impact consumers’ financial wellbeing in the months ahead.

Our survey highlights three key trends.

The recovery is revealing inflation fears as well as generational and geographic divides

It’s been many years since inflation was last a cause of widespread concern in Europe. Today, however, consumers tell us that they are worried about rising prices having a negative impact on their personal finances. Many also believe that their financial wellbeing will be at risk for some time to come, with a significant minority expecting the crisis to affect their finances for at least another 12 months.

As a business, we at Intrum have seen how the pandemic has deepened existing inequalities, and this also plays out in the survey results. Those in low-income households are, for example, more likely to be worse off now than they were before the crisis.

We also see how the pandemic has left some countries and consumer groups worse off than others. As a business, we have seen how the pandemic has deepened existing inequalities, and this also plays out in the survey. Those in low-income households are, for example, more likely to be worse off now than they were before the crisis. There is also a growing generational divide, with many more Gen Z consumers (aged 18 to 21) than Baby Boomers (55 and up) saying they are worse off. Consumers in Southern and Eastern Europe are also disproportionately more likely to have been affected.

Consumers are embracing sustainable behaviours, creating new challenges for businesses

Over the last 12 months, Europe has seen a series of devastating weather events, which have ensured that climate and the environment remain front of mind. Our study suggests that these concerns are increasingly influencing consumer behaviour, with many saying that they don’t want to give their money to a company that they knew harmed the environment.

This sentiment has broader implications for customer payments. We find consumers – especially Gen Z respondents – having no second thoughts about paying a company later than agreed if they thought that company was unethical. While it’s true that consumer intentions don’t always translate into action, businesses would be wise to pay attention to this growing trend.

Consumers see an opportunity for future stability but need help to secure financial wellbeing

In our 2020 research, we found that consumers were enriching their financial literacy to help them manage the impact of the pandemic on their finances. Encouragingly, this year’s study suggests that many have upheld this ambition. The crisis has motivated consumers to set targets to better manage bills, while the majority of parents say they are spending extra time helping their school-age children understand financial terms and principles.   

The economic and social fallout that we have lived through has been unprecedented in modern times. Despite the economic rebound, many consumers face financial challenges for many years to come. As they look ahead, financial literacy and planning will be key to building a stable future for themselves and their families.

Considering the challenges posed by inflation and other economic developments, consumers would be right to deepen their understanding of financial matters. It is concerning, however, that there is still plenty of uncertainty about how inflation would affect people’s savings. Many would likely also benefit from exploring what rising interest rates might mean for their household finances.

Foundations of financial wellbeing

The economic and social fallout that we have lived through has been unprecedented in modern times. Despite the economic rebound, many consumers face financial challenges for many years to come. As they look ahead, financial literacy and planning will be key to building a stable future for themselves and their families.

Intrum’s purpose – to lead the way to a sound economy – is at the heart of our business. Speaking to 250,000 people in debt every day, we are passionate about helping consumers improve their financial literacy, helping them make responsible decisions about their borrowing and debt management. In so doing, we can help pre-empt late payments and excessive debt, and encourage sustainable payment flows to help businesses thrive.

Anders Engdahl
President and CEO
Intrum

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