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Europeans are World's Biggest Spenders
LONDON -- More than half of consumers in Europe's largest countries say their economies have deteriorated in the last six months and, with few signs of economic recovery, are bracing themselves for another tough year ahead, according to the findings of a survey released recently by ACNielsen. The Italians remain the most pessimistic overall (only 21% believe the economy will improve over the next 12 months) with Europe's most optimistic nation being Norway (where 42% believe the economy will improve). The study, which covered 28 markets across Europe, the United States and Asia Pacific, found that 40% of consumers in Europe think their economy deteriorated over the last six months, 41% thought it had stayed the same, and 35% expect it to deteriorate further over the next year. "It has been a tough time for consumers in Europe and most people believe things are going to get worse -- or at the very best remain the same -- before they get any better," said Frank Martell, president, ACNielsen Europe. Slower-than-expected economic growth had seriously impacted consumer confidence in the major European markets of Germany, Italy and France, the survey found. Italian and French consumers have been hit the hardest -- with 69% of Italian and 60% of French respondents saying they felt their economies had deteriorated in the past six months. And while they don't think their economy will be quite as bad in the next 12 months, they aren't expecting economic recovery any time soon. Consumers in the Asia Pacific are clearly the most optimistic about the next 12 months. "They've come out a difficult period and are finally looking to brighter horizons, Martell said, adding that 53% of people in Asia Pacific believe their economies will improve in 2005 compared to 43% in the United States and 31% in Europe. "The prevailing mood in Europe is that consumers seem resigned to their current economic situation but life but must go on, and despite the current gloomy economic outlook, they are not going to sit around and get depressed about it," Martell said.European discretionary spending habits are surprisingly healthy, especially compared to a global scale. When consumers worldwide were asked about their spending habits and what they do with their spare cash once living essentials are covered, Europeans said they wanted to go out and enjoy life with out-of-home entertainment topping their list of priorities. In fact, globally, European consumers spent more on 'out of home' entertainment than the US and Asia Pacific, the survey found. After spending on 'out of home entertainment', putting money into savings/deposits was the second most popular spending choice among consumers in nearly every European market, followed equally by spending on home improvements/decoration and buying new clothes. In the Top 10 ranking for those consumers investing their money in keeping up 'chic' appearances, six countries were from Europe, led by 51% of consumers from the Netherlands, followed by Spaniards (45%), Germans (42%) and Austrians (40%). Spain is obviously the place to go for a good time. Nearly two thirds (60%) of Spaniards, the highest ranking on the ACNielsen global spending habits scale, said they spent their spare cash on out of home entertainment compared to a global average of 34% -- as did nearly half of respondents in the Netherlands, Belgium, Italy and France. When it comes to saving money and putting spare cash into their bank accounts, the Netherlands, Belgium, Italy and France say they are also among Europe's most conscientious savers. "This suggests a healthy balance between spending for the present and enjoying life as well as saving for the future in these countries," Martell said. The UK, however, has a different story to tell. "In Europe, the UK has the highest percentage of consumers -- 37% compared to the global average of 27% -- who say they spend their spare cash on paying off credit cards debts and loans and at the same time are among those least likely to invest in savings/deposits," Martell said. The UK also ranks among the lowest in Europe for investment in superannuation/pensions and the stock market/mutual funds, he added. The British also are among the top three markets claiming not to have any spare cash. After Portugal, where 18% of Portuguese respondents said they didn't have any cash left after essential living expenses, the UK ranked second with Germany, with 16% of respondents in both markets saying they had no money left for spending or saving. "Among British consumers who do have spare cash, their first priority is debt repayment," Martell observed. "Overall, the UK ranked fifth for debt repayment among all 28 countries included in the survey." In stark contrast, the Belgians rank among the highest in Europe for putting their spare cash into saving/deposits accounts and into superannuation and pensions, while the Norwegians ranked the highest for saving the most in share and mutual funds. In the top 10 ranking for those consumers putting money into retirement payments, eight were from Europe, led by Austrians (24%), Germans (18%), Belgians (17%), Danish and French (12%). This compares to a global average of 7%. On a global comparison, Asia Pacific consumers rank head of Americans and Europeans for putting their spare cash into savings/deposits accounts and they're the highest saving region in the world. 49% of respondents in the Asia Pacific said that bank/deposits are their top 'spare cash' priority compared with only 23% of consumers in the USA. "It is interesting that despite being most pessimistic in the world about their current and future economic outlook, Europeans appear to be the biggest spenders in comparison to respondents in the United States and Asia Pacific," Martell said. "Europeans are spending more on out-of-home entertainment, new clothes, home decorating/improvements and international holidays. Asia Pacific respondents top the scale for spending on new technology as well as Savings/deposits accounts while the USA takes the lead over Europe and Asia Pacific in only one spending category -- paying off debts/credit cards and loans." Not surprisingly, consumers the world over share common concerns -- for the economy and their job security, which were also the two top consumer concerns in Europe, United States and Asia Pacific. Aside from these two concerns however, there are some individual fears and concerns shared by each region. "When we look at consumers' main fears and concerns across the world, we can see that each country has very distinct attitudes depending on their current social and political climate -- which could be directly related to their country's involvement in the war in Iraq," Martell said. On a global scale, fear of a terrorist attack is highest among the British and Italians (66% and 65% respectively) followed by the United States (64%) and Spain (61%). This compares to a global average of 40%. In total, six in the top 10 countries most concerned about terrorism were European countries. "There is a real concern in the UK and Italy about terrorism as well as in Spain, a clear reminder that the Madrid train bombings earlier this year are still very fresh in people's memories," Martell said.Spain and Italy also scored the highest in Europe, and second and third globally after the United States, for their concern about the War in Iraq and where both countries have their troops involved, the survey found.Despite being the most optimistic about their economic future, Asia Pacific respondents were on a global scale, the most concerned about their job security. "The Asian region has experienced some tumultuous years and has battled with unstable financial as well as political conditions," Martell said. "The double-dipped Asian crisis in the last six years combined with SARS has taken its toll on Asian consumers and has left them with a sense of vulnerability and innate insecurity. Asian consumers are acutely aware of saving for a rainy day -- because their recent experience has taught them that when it comes to economic crises, you can never be too well prepared." Visit ACNielsen: www.acnielsen.com This report is new this week in The Business Journal's small business how-to section. To see what else is new, click here or click on the "how-to" tab at the top of The Daily Business Journal Online home page."