If one were to choose two words to capture the financial essence of the 21st century, surely ‘volatile’ and ‘uncertainty’ would come to mind. Just three months into the new century, the mania surrounding dotcom suddenly dove into depression as its bubble burst. Soon after, the terrorist attacks on the World Trade Center rocked stock markets around the globe.
And almost seven years to the day, the world’s financial markets were hit by an attack of their own making. The stock market crash of 2008. On its heels – the European sovereign debt crisis.
It’s little wonder European investors are jittery. Especially the 50+ generation who – nearing retirement or already retired – is little able to recoup its losses.
To understand the degree to which the most recent economic crisis has impacted the financial behavior of wealthier Europeans aged 50 to 70, Allianz International Pensions conducted a survey of 1,400 people in seven European countries: Austria, France, Germany, Italy, the Netherlands, Switzerland and the United Kingdom. With some surprising results.
When asked to what extent the euro debt crisis had impacted their financial situations, answers tended to mirror the development of assets in each country’s private households. Not unexpectedly, investors in Germany and Switzerland, where overall assets increased between 2010 and 2012, felt less impacted by the euro crisis (62%). In a break from reality, however, half of the Dutch surveyed believed the crisis had an adverse impact on their financial situation even though financial assets in the Netherlands performed well overall.
Given the above, it logically follows that German and Swiss investors did not change their savings behavior. However, despite actual results, the majority of Austrians, Dutch, French and British didn’t either. Among the seven countries surveyed, only the Italians changed their savings behavior. Marching to the beat of their own drums, one out of two Italians reported saving less.
When it comes to absolutes – definitely yes and definitely no – Austrian responders were as confident in the euro as they were skeptical (11%). That said, despite the continuing uncertainty surrounding financial markets, in large, most euro-zone responders trust the euro. Unsurprisingly, non-euro-zone countries Switzerland and the United Kingdom were overwhelming resolute in their mistrust. The British, in particular.
General consensus was found on two fronts. For one, whether or not they eventually change their investment behavior, the majority of responders are at least reviewing it – primarily with an eye to reducing risk. In addition, 80% believe tax hikes are on their way and more than 70% fear inflation will increase.
International Pensions Paper for more details