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Is the EU crisis still impacting Australians?

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Is the EU crisis still impacting Australians

The news in the last two days has been full of headlines about the tax grab on Cypriot savings; five years on from the GFC and most of Europe is still very much in the doldrums. That doesn’t appear to have damaged the Australian economy overall, but it is affecting individual Australians in a range of ways.

In a country that hasn’t had a recession in two decades and which enjoys interest rates and unemployment of around five per cent and an inflation rate of around two per cent it can be hard to see the ways the EU crisis is relevant. While countries in Europe have national debt (as a percentage of GDP) ranging from 81.8 per cent (Germany) to 168.2 per cent (Greece)[1], Australia’s is a comparatively modest debt ratio of 22.9 per cent[2]. Nevertheless, when asked, three Australians from different generations all had stories about how the dire situation in Europe is impacting them.

The Gen Yer

George, a 21-year-old uni student, says he’s reminded on an almost daily basis of the EU crisis.

“My parents are Greek and they’ve constantly got relatives who are still over there ringing them up and asking if they can help them migrate. I don’t think Aussies get just how bad thing are in countries like Greece , young people, even with degrees, basically have no chance of finding a job; the youth unemployment rate there is 55 per cent[3].

“People complain about the government here, but I say to them,

‘Spend five minutes on the phone with my cousin in Athens who’s been unemployed for six months and you’ll really appreciate what you’ve got.’ ”

The Gen Xer

Dave believes that while the situation in Europe might have been good for shoppers, it hasn’t helped people who work in shops.

“People are a lot more careful about spending, which isn’t great for the retail industry,” says the 42-year-old store manager. “Sales and margins are down and the strong currency means people are buying from overseas, either when they’re on holiday or via the internet.

“I’ve still got my job, but I know people who’ve lost theirs. I think Australians see all the bad news coming out places like Europe and think they better save up just in case things go bad here as well. Hopefully, the economy in those countries will improve this year and consumer confidence around the world will pick up.”

The Baby Boomer

Reginald is a retired accountant who describes himself as “on the wrong side of 60”. He views the European situation as a mixed blessing.

“I’ve done a bit of travelling since I stopped working and I’ve been amazed at how strong Australia’s dollar is and how cheap some of the prices are in parts of Europe. On the other hand, my super took a battering as a result of the GFC and still hasn’t recovered five years later, which is something that weighs on your mind as a self-funded retiree.

“I guess my major concern is something happening in Europe, like Greece defaulting on its loans, could be the catalyst for a global economic downturn, but my understanding is that the danger period for that kind of thing happening has passed and things should slowly start to improve in future.”

Overall, the attitude of Australians seems to be that we should keep a close eye on what’s happening overseas but count our blessings that the fundamentals of Australia’s economy seem to be strong enough to ensure it keeps powering along, even as other nations experience flat or negative growth.


Sources:

[1] Difficult to get up to date figures, these two are from  http://www.huffingtonpost.com/2012/02/15/countries-in-debt_n_1278711.html#slide=698316
[2] http://www.tradingeconomics.com/australia/government-debt-to-gdp
[3] http://www.theatlantic.com/business/archive/2012/10/europes-most-tragic-graph-greek-youth-unemployment-hits-55/263118/