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Chapter 4: Restoring Convergence between Member States in the EU and EMU
2.2.3. Trends in public Households’ debt to income ratios had been diverged in the decade preceding the cri -
and private indebtedness converging overall in Europe since the mid- sis, with significant increases in the EU-15
1990s but this convergence essentially Southern and periphery zone (see Chart 22)
Trends in public and private indebtedness halted during the crisis (see Chart 22) and and declines mostly in EU-13. These diverg -
can also contribute to diverging socioeco - was accompanied by a significant increase ing developments reverted somewhat dur-
nomic performance, notably since increases between 1999 and 2008 (over 20 percent - ing the crisis, with some significant declines
in good economic times can reduce access age points for the whole EU average). This in some EU-15 Southern and periphery
to credit in bad economic times, while increase was not only significant in EU-13 Member States (in particular in Spain and
increases in private debt can fuel consump - Member States (in relative and absolute Portugal).
tion when debt is increased, but also then terms) where initial levels were relatively
reduce consumption when debt is serviced. low, but also in some Member States where Public debt to GDP ratios showed some
Furthermore, during an economic downturn, rates were already relatively high (such divergence before the crisis, notably as
servicing debt may have a strong adverse as Ireland, the Netherlands or Denmark). a result of increases in Southern and
impact on the purchasing power of house - During the crisis household debt to income peripheral EU-15 Member States (such
holds (especially when inflation is lower ratios were on average nearly stable, as Portugal and Greece), but also due
than expected), notably at the lower end of including in Member States where house - to declines in some EU-15 Northern
the income distribution. This may also hin - hold incomes were more strongly affected. Member States (such as Sweden and
der convergence across Member States, to Denmark) and EU-13 Member States
the extent that it stifles aggregate demand While household debt to income ratios con- (such as Bulgaria and Slovakia). Over-
in debtor countries. verged, non-financial corporate indebtedness all, there was some convergence over
Chart 22: Trends in households’ gross debt to income ratio (1995–2013)
Dispersion Changes
75 300
250 2011-12 2008-11 1999-08 1999 2012
70 200
150
% 65
100
50
60
0
55 -50
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LT SK SI PL HU LV CZ IT EE FR DE AT BE EA-17 EU-28 FI PT ES UK LU SE IE NL DK
Source: Eurostat, calculations DG EMPL.
Notes: Gross debt-to-income ratio of households as registered by national accounts ((AF4, liab)/(B6G+D8net)). Missing data for BG, EL, CY, HR, MT and RO, some
missing data at the beginning of the period were kept constant for the calculation of dispersion : IE (1995-01), ES (1995-99), LU (1995-2005), SI (1995-01).
Reading note: Dispersion measured as the coefficient of variation, based on the EU-28 weighted average.
Chart 23: Trends in non-financial corporations’ net debt to income ratio (1995–2013)
Dispersion Changes
160 2500
1999-08 2008-11 2011-12 1999 2012
140 2000
120 1500
100 1000
% 80 500
60 0
40 -500
20 -1000
0 -1500
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 BE NL LT CZ DE SK PL EE LV HU UK IE SE FR EA-17 AT FI DK ES IT PT SI
Source: Eurostat, calculations DG EMPL.
Notes: net debt-to-income ratio, after taxes, of non-financial corporations: (AF2+AF33+AF4, liab - assets)/(B4N-D5PAY). Missing data for BG, CY, EL, MT and RO,
some missing data at the beginning of the period were kept constant for the calculation of dispersion DK (1995-02), EE, SI (1995-01), ES (1995-99), PL
(1995-96), LV (1995 and 1997).
Reading note: Dispersion measured as the coefficient of variation, based on the unweighted average.
217
2.2.3. Trends in public Households’ debt to income ratios had been diverged in the decade preceding the cri -
and private indebtedness converging overall in Europe since the mid- sis, with significant increases in the EU-15
1990s but this convergence essentially Southern and periphery zone (see Chart 22)
Trends in public and private indebtedness halted during the crisis (see Chart 22) and and declines mostly in EU-13. These diverg -
can also contribute to diverging socioeco - was accompanied by a significant increase ing developments reverted somewhat dur-
nomic performance, notably since increases between 1999 and 2008 (over 20 percent - ing the crisis, with some significant declines
in good economic times can reduce access age points for the whole EU average). This in some EU-15 Southern and periphery
to credit in bad economic times, while increase was not only significant in EU-13 Member States (in particular in Spain and
increases in private debt can fuel consump - Member States (in relative and absolute Portugal).
tion when debt is increased, but also then terms) where initial levels were relatively
reduce consumption when debt is serviced. low, but also in some Member States where Public debt to GDP ratios showed some
Furthermore, during an economic downturn, rates were already relatively high (such divergence before the crisis, notably as
servicing debt may have a strong adverse as Ireland, the Netherlands or Denmark). a result of increases in Southern and
impact on the purchasing power of house - During the crisis household debt to income peripheral EU-15 Member States (such
holds (especially when inflation is lower ratios were on average nearly stable, as Portugal and Greece), but also due
than expected), notably at the lower end of including in Member States where house - to declines in some EU-15 Northern
the income distribution. This may also hin - hold incomes were more strongly affected. Member States (such as Sweden and
der convergence across Member States, to Denmark) and EU-13 Member States
the extent that it stifles aggregate demand While household debt to income ratios con- (such as Bulgaria and Slovakia). Over-
in debtor countries. verged, non-financial corporate indebtedness all, there was some convergence over
Chart 22: Trends in households’ gross debt to income ratio (1995–2013)
Dispersion Changes
75 300
250 2011-12 2008-11 1999-08 1999 2012
70 200
150
% 65
100
50
60
0
55 -50
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LT SK SI PL HU LV CZ IT EE FR DE AT BE EA-17 EU-28 FI PT ES UK LU SE IE NL DK
Source: Eurostat, calculations DG EMPL.
Notes: Gross debt-to-income ratio of households as registered by national accounts ((AF4, liab)/(B6G+D8net)). Missing data for BG, EL, CY, HR, MT and RO, some
missing data at the beginning of the period were kept constant for the calculation of dispersion : IE (1995-01), ES (1995-99), LU (1995-2005), SI (1995-01).
Reading note: Dispersion measured as the coefficient of variation, based on the EU-28 weighted average.
Chart 23: Trends in non-financial corporations’ net debt to income ratio (1995–2013)
Dispersion Changes
160 2500
1999-08 2008-11 2011-12 1999 2012
140 2000
120 1500
100 1000
% 80 500
60 0
40 -500
20 -1000
0 -1500
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 BE NL LT CZ DE SK PL EE LV HU UK IE SE FR EA-17 AT FI DK ES IT PT SI
Source: Eurostat, calculations DG EMPL.
Notes: net debt-to-income ratio, after taxes, of non-financial corporations: (AF2+AF33+AF4, liab - assets)/(B4N-D5PAY). Missing data for BG, CY, EL, MT and RO,
some missing data at the beginning of the period were kept constant for the calculation of dispersion DK (1995-02), EE, SI (1995-01), ES (1995-99), PL
(1995-96), LV (1995 and 1997).
Reading note: Dispersion measured as the coefficient of variation, based on the unweighted average.
217
