Today we launch the Financial Wellbeing Barometer

The Financial Wellbeing Barometer aims to provide a holistic perspective on how consumers across 24 European countries are managing their personal finances, ranking from 1 (top) to 24 (bottom).

As discussed in our European Consumer Payment Report 2021 (ECPR), published in November 2021, consumers are hopeful that the recovery will continue throughout 2022 but are apprehensive about the prospect of rising inflation and a new global crisis. But how is the financial wellbeing among consumers?

We define financial wellbeing as ‘the financial security to meet everyday spending needs and be in control of one’s finances.’ The Barometer take several aspects of personal finances into consideration when calculating the wellbeing score; income level, ability to pay bills on time, debt-to-income ratio, saving rates and level of financial literacy.  All of these factors are calculated to an overall country score and aggregated ranking. Which countries rank highest and lowest?

Our latest white paper, published March 2022, comes at a time of change and uncertainty in Europe. At the time of writing, the Russian invasion of Ukraine has very much clouded the near-term outlook of the European economy. Apart from severe social and political consequences, we can expect direct economic impact on Europe.

DACH countries report strongest financial wellness

The three DACH countries – Germany (D), Austria (A) and Switzerland (CH) – are the overall strongest performers on this year’s Barometer, thanks to resilient household disposable incomes, along with consistently high financial literacy.

A modest rebound in Southern Europe

When Intrum surveyed consumers at the height of the 2020 pandemic, we saw significant falls in the financial wellbeing of consumers in Southern Europe, as Covid-19 decimated the travel and hospitality industry and deepened pre-existing household debt and financial instability in countries such as Italy, Spain, and Greece.

A little over a year later, Italy, Spain and Portugal all show improvements in their financial wellbeing. On the other side, in an economy that relies heavily on tourism, Greek consumers are particularly concerned about the long-term impact of the pandemic.

Near-term outlook: inflation will likely accelerate due to Russian Invasion

As the current situation is dynamic it is difficult to predict how severe the pricing pressures and the impact on the overall economic conditions will be. The uncertainty caused by the Russian invasion, and Western sanctions on Russia in response to their military actions, pushed prices of oil and gas sharply up.

European gas prices jumped by over 50 per cent while the Brent crude oil price rose above $100 per barrel when the conflict started, and recently rose to the highest levels since 2008, on speculation that the EU and US will introduce a ban on imports of Russian oil, as part of their sanctions.

Faced with continued sharp rises in prices, households and businesses could struggle to meet financial obligations. This is especially true for sectors which were hurt the most by the pandemic, and where little or even no savings accumulation occurred over the last two years, which could otherwise provide some shield against the sharp rise in inflation
Anna Zabrodzka, Senior Economist at Intrum

Moreover, Russia is the key producer and exporter of various other raw materials, such as coal, iron, aluminium, copper, nickel and platinum. Meanwhile, Ukraine is an important producer of neon gas which is used in chip production.

These factors will likely exacerbate supply chain disruptions. What to prepare for?

Download the full white paper: