What is the average debt of UK households
That is how much Germans are in debt
Despite a strong economy, 2.05 million German households were in debt in 2016 according to the poverty and wealth report of the federal government. The trend rose sharply between 2006 and 2016, as ten years earlier there were only 1.64 million over-indebted households. The increase is therefore 25%.
Looking at the individual citizens, the debt increased from 3.4 million people in 2006 to 4.17 million in 2016, which corresponds to an increase of 22.6%. Thus the debtor quota rose from 5.1 to 6.1% within ten years.
How do private debts arise in Germany?
One of the main reasons for private over-indebtedness is job loss. Addiction problems, the consequences of an accident or illness are also responsible for the debts of Germans.
The regional differences in Germany are particularly striking. In Bavaria, for example, only 7.35% of all adult residents are in debt and in Bremen, at 14%, it is almost twice as many. Baden-Württemberg with 8.34% and Thuringia with 9.24% show further low values, at the lower end are Berlin and Saxony-Anhalt besides Bremen.
This is how Germany compares to other European countries
The latest data on private debt in a European comparison are available from 2014 and are based on a report by the management consultancy McKinsesy. Denmark had the most private debt in Europe in 2014. From a macroeconomic perspective, the Netherlands led the comparison in 2014. Germany was slightly below the global average.
In relation to economic output, the total debt of the Netherlands in 2014, composed of government debt, debt in the financial sector, corporate debt and household debt, was 687% of economic output. Private households account for 115% of this, which means that every Dutch person has 115% of their disposable household income in debt.
No people are so heavily in debt as the Danes
Ireland ranks second in terms of total indebtedness with 680% of economic output, of which households account for only 85%. In macroeconomic terms, Denmark ranks third among the debt giants, with 538% of economic output, but in the private sector the Danes lead the field with 129%.
The reason for this high private debt is mortgage loans. 63% of all Danes own real estate and 68% of all Dutch. In addition, there was a construction boom in Denmark, for example, because construction rates were so low. However, only a little is repaid and this is where the high debt originates. The same applies to the Netherlands. Loans are high, but house prices are falling.
This is what Germany’s total debt looks like
Germany had total debt of 258% of economic output in 2014, with private households accounting for 54%. This means that every German is in debt with 54% of their disposable household income. The fact that the Germans have less debts than the Danes or Dutch is due, among other things, to the fact that fewer Germans have mortgage debts. Only 52% of Germans own real estate, which is 11 and 16% less than in the two neighboring countries.
In 2014, the Germans were only less than half as indebted as the Danes. Other European countries with high private indebtedness are Spain (73%), Great Britain (86%) and France (56%).
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