German shoppers plan to increase their holiday spending this year, while consumers in many parts of Europe cut back because of the region’s sovereign-debt crisis, according to a study from Deloitte LLP.
Germans will spend 4.3 percent more than last year at Christmas, while the French are forecast to increase their budget by only 1.9 percent and Greeks will cut their outlay by more than 20 percent, a poll of more than 18,000 consumers in Europe and South Africa showed. More than half of Germans say the economy is stable or growing, while 71 percent of French people say their country is in a recession, Deloitte said.
A report yesterday showed European retail sales fell 0.7 percent in September from the prior month, worse than economists forecast, as the region’s sovereign-debt crisis led households from Ireland to France and Spain to cut spending. Retail sales in Germany rose during the month, helped by a 27th straight monthly decline in unemployment. Consumers in France, Greece, Italy and Portugal are the most concerned that their countries may enter recession next year, according to Deloitte’s study.
“Europe’s debt crisis, combined with multiple cuts to growth forecasts, has sounded the death knell of the last consumers who were hoping for a better future in the near term,” said the report’s authors, Antoine de Riedmatten and Stephane Rimbeuf.
Christmas spending will fall by more than 7 percent in Ireland and Portugal, according to the study. Nine out of ten people in Greece say that their country is in recession, compared with more than 80 percent of the population in Portugal and Italy. In contrast, holiday spending in Russia and South Africa will increase by more than 10 percent, the study found.
Overall, 61 percent of Europeans say they will reduce their Christmas expenses this year because they are worried the economic situation will worsen, Deloitte said. Twenty-three percent say they have too much debt and 20 percent say they want to save money in case they lose their jobs.
The two most important criteria for shoppers when purchasing gifts are usefulness and price, Deloitte said.
Seventy-two percent of French consumers will buy Christmas gifts on promotion, Deloitte said. French shoppers will spend an average 606 euros ($830) on gifts, “additional food” and “additional socializing” at the end of the year, compared with 449 euros for Germany, Deloitte said. Irish consumers still have the largest budget at 943 euros, according to the study.
Entertainment, holidays and clothing are the expenses that were reduced the most by Europeans this year, the survey shows.
The Organization for Economic Cooperation and Development on Oct. 31 lowered its growth forecasts for the U.S. and the euro area. The U.S. economy, the world’s largest, will expand 1.7 percent this year and 1.8 percent next, the Paris-based OECD said. By contrast, the euro area will grow 1.6 percent in 2011 and just 0.3 percent in 2012, it said.
Deloitte’s poll was conducted in 18 countries during the second and third weeks of September.