ECONOMY

Households slashed consumer spending by 15 pct in three years

Greece suffered the fourth-highest decline in household consumer spending among the 27 members of the European Union from 2008 to 2011, according to data released on Tuesday by Eurostat.

Consumer expenditure dropped by 15.3 percent over the three-year period, but 2011 saw Greece register the highest decline in one year, amounting to 7.1 percent, with cuts affecting spending in apparel, telecommunications, transport and furniture.

The country’s economic policy over the last three years or so has clearly led to major losses in disposable income. The crisis has had a direct impact on the consumption habits of Greek households, which have seen their incomes hit on two fronts: first via cuts to salaries and pensions, or even loss of jobs, and second with soaring direct and indirect taxation.

A few days ago the Hellenic Statistical Authority announced that households’ disposable income had shrunk by 5.4 billion euros or 13.6 percent within just one year. Now Eurostat has confirmed this trend, showing that only the three Baltic states (Estonia, Latvia and Lithuania) suffered a greater decline in consumer spending from 2008 to 2011 than Greece.

Yet the picture gets much worse for Greece when looking at the 2011 figures: The 7.1 percent drop is by far the highest in the EU, with the United Kingdom a distant second with a fall of 0.8 percent.

That was a year when salary and pension cuts as well as tax hikes grew bigger, forcing households to reduce their spending in all categories, but more so in transport by 37.5 percent, clothing by 28.6 percent, telecommunications by 28.3 percent and furniture by 26.6 percent. That also serves to illustrate the economic sectors that have been hit hardest by the crisis, while the decline in consumption has definitely grown in 2012 and at the start of this year.

Eurostat has also recorded the drop in per capita consumption in Greece in 2011. The average amount spent by each Greek came to 15,000 euros throughout 2011, which is below the average in the EU, at 17,500 euros, and in the eurozone, at 20,000 euros. Portugal, however, fared even worse, with average spending amounting to 12,500 euros per person.