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Monday, 27 February 2012

Investigation by Panteia shows: 27% of Dutch people is currently in arrears

Today the Dutch research bureau Panteia ( presented its ‘Monitor on Payment Arrears’ for 2011, for which it was assigned by the Dutch Ministry for Social Affairs and Labour. The aforementioned link is courtesy of Dutch news website Here are the most important conclusions from this Panteia report:

  • In The Netherlands there are 2.02 million households with at least one of the distinguished forms of payment arrears. This is inclusive 34,400 households that are currently in an official program, called ‘Debt Reduction for Natural persons’(WSNP):
    • Outstanding arrears for financial reasons (352,000)
    • Credit facilities or loans (1,392,000, excluding mortgages)
    • Payment arrangements (591,000 during the last 12 months and 404,000 as of now)
    • Regular overdraws on the current account (1,134,000)
    • Credit card debt (157,000 with a payment arrangement)
  • Related to the total number of 7.2 million households, this is 27.8% of all households, compared to 26.7% in 2010, 24.8% in 2009 and 27.0% in 2008
Outstanding arrears 
  • 9.36% or 680,000 people had outstanding arrears for financial reasons with minimal one bill.
  • 3% or 213,000 people had outstanding arrears for at least four different types of bills.
  • Outstanding arrears is most often signalled at:
    • Internal Revenue Service bills : 5.6%
    • Healthcare insurance bills      : 5.4%        
    • Mortgage or rent                 : 4.5%
    • Utility bills                          : 4.3%
  • All forms of arrears occur more often in 2011 than in 2010
  • 57% of households, or 201,000 has less than €2000 in outstanding arrears
  • 26.2% or 92,000 has between €2000 and €10,000 in outstanding arrears
  • 11,2% (against 4% in 2010) has an outstanding arrears of more than €10,000.
Loans and overdraft credit lines
  •  2.7% of all households has more than one loan or credit line at the time.
  •  The average size of a loan or overdraft credit is €13,800
  •  The average size of educational debt is €15,000
  •  People that borrowed money from their family (5.8%), borrowed in average €9,400.
  • The number of all kinds of loans rose in 2011, compared to 2010 and 2009.
Payment arrangements
  • 5.6% of all households (404,000) is currently paying back goods or services delivered through a payment arrangement. This was 2.6% in 2010, 2.2% in 2009 and 6% in 2008.
Current account overdraws
  • 7.1% of all households (515,000) overdraws its current account on a regular basis
  • 8.5% (619,000) overdraws its CA often.

Credit card payment arrangements

  • 2.17% or 157,000 households has currently a payment arrangement on its creditcards. This was 2.75% in 2010, 1.6% in 2009 and 2.67% in 2008. 
  • These 157,000 households have an average credit card debt of €1,856.

These are shocking data and it proofs that, after a brief 2y period of debt destruction, people are rebuilding their debt to the 2008 level. This is a very dangerous development, as I suspect that the 2011 debt rise is not caused by debt-creation as a consequence of excess consumption, but by people filling one pothole with another.

Consumption and especially consumer confidence dropped strongly in 2011 and then it doesn’t make sense that people would have taken more loans and credit lines out of luxury. There is one category of debt that is actually lower than last year and that is credit card debt in the form of payment arrangements. This also seems to point in the direction that current debt rise is not a result of excess consumption and ‘spending like there is no tomorrow’.

Also the huge amount of €15,000 in educational debt shocked me. And moreover, it is impossible to see the development of educational debt loose from the desire of the government to make higher education (colleges and universities) more expensive, more efficient and less dependent on government budgets. This neoliberal policy is turning around years of social-democrat policy where studies should be accessible for everybody. Whether you agree or disagree with this policy; an undeniable fact is that is spurs indebtedness among students.

And don’t be mistaken about educational debt; it’s nothing less than a disaster for drop-out students that flunked their exams and thus have to accept a lower paid job, but even for successful students that do find a well-paid job, €15,000 is a lot of money to pay back.

All in all, there is a lot of debt in Dutch society. According to the CIA World Factbook, the total amount of private debt in The Netherlands in 2011 was 376% of GDP. And it seems that this amount of debt is starting to choke people in The Netherlands. Read the other stories on indebtedness, using my search engine.

Therefore the conclusion must be that there is a big chance that the double dip-recession that started in 2011Q3, will continue and deepen in 2012. Facts like the rising unemployment, the rising indebtedness of Dutch citizens, the maintaining problems on the Dutch housing market and the all-time low consumer confidence cannot be denied anymore. Therefore fasten your seatbelts, because 2012 might be a very bumpy ride. 

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