Steady growth in consumer spending across most EU markets in Q2

30 September 2011

Visa Europe's EU Consumer Spending Barometer shows European Union countries recorded a 2.5% year-on-year growth in consumer spending in Q2 2011

Consumer spending grew 2.5% year-on-year in the second quarter (Q2) of 2011, building on the 2.5% growth recorded in the first quarter. The first half of 2011 witnessed the highest growth in consumer spending in five years but recent events across the EU could mean the outlook for the rest of the year is less positive.

Consumer spending levels have increased for seven straight quarters, with the highest growth in Q2 coming from consumers in Central and Eastern Europe: double-digit growth was registered in Latvia (12.6%) and Estonia (10.2%). Robust year-on-year growth was also recorded in the Czech Republic (8.9%), Poland (7%), Slovakia (6.6%) and Lithuania (6.5%).

Of the EU's biggest economies more modest growth was recorded in France (2.6%) and Germany (3.4%), while Spain registered a stronger than expected increase of 4.3%. Consumers in the EU's troubled "peripheral" countries, including Portugal and Ireland, saw consumer spending contract.

Following a year-long period of severe contractions, austerity hit Greece registered broadly no-change in spending levels in Q2 2011.

Visa Europe's EU Consumer Spending Barometer is based on actual spend rather than sentiment or opinion, and this data is then adjusted to allow for Visa card issuance, consumer payment preferences and inflation. The Barometer is a reliable economic indicator as it provides the most precise and comprehensive insight into the health of consumer spending in the EU.

Unlike other indices or surveys that are based on sentiment or opinion in particular sectors, this Barometer provides an accurate reflection of real consumer spending across the EU based on consumer's increasing preference for card payments, with €1 in every €8 spent in Europe on a Visa card.

Unadjusted spending on all Visa cards in the European Union continued to rise at a double-digit pace of 13.4% in Q2, with a total of €254 billion spent over the three month period.

Philip Symes, Chief Financial Officer at Visa Europe said: "In the quarter to June, we have seen steady growth across most markets. Given the events of recent weeks which have seen global stock markets tumble and Europe politicians in crisis talks regarding sovereign debt, the findings of Q2 seem at odds with the news agenda. It is difficult to estimate to what extent recent events will dent consumer confidence in future."

About the Visa Europe's EU Consumer Spending Barometer

Over one in every eight euros spent in the EU is on a Visa card, with more than 70% of that spending on debit cards. This means the Barometer provides a uniquely comprehensive and timely insight into the health of consumer spending in the European Union.

Visa Europe's EU Consumer Spending Barometer is based on spending on all cards issued by Visa – debit, credit and prepaid. Markit has developed the Barometer by creating a model which adjusts the raw Visa transaction data for a number of factors.

First, the data are deflated by changes in the number of Visa cards issued to account for the expansion of Visa's business. Secondly, an adjustment is made to offset changing consumer preference for card usage. This is based on an assessment of the trends in cash withdrawals and point-of-sale (POS) transactions on Visa cards. Finally, to account for inflation, the data are deflated by changes in the consumer price index to provide an indicator of real changes in household expenditure.

The Visa data have enjoyed a strong positive relationship with equivalent official numbers in recent years. The Visa data cover a much wider range of sectors than just retail as cards are increasingly used for payments such as utility and tax bills.

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