Why Consumer Debt Is Rising Faster Than Wages
July 19, 2025 · Frisian News
Household debt across Europe has climbed 8 percent this year while average wages rose just 2.3 percent, forcing ordinary workers to borrow more to maintain their living standards. Banks and credit firms profit from this gap, while governments ignore the structural problem.
A family in Rotterdam bought a car last month they could not afford outright, so they took a loan at 7.8 percent interest. Three months earlier, their wages had frozen while the cost of food and electricity jumped 15 percent. This scene repeats in cities and towns across Europe. Household debt has climbed 8 percent this year, official figures show, while average wages grew just 2.3 percent. Workers are falling behind, so they borrow to stay level.
The gap exists by design. Central banks kept interest rates low for years, then raised them sharply once inflation hit. This cheap money phase ended, but prices for housing, energy, and goods never fell back. Workers earning the same money now face bills that cost far more. They fill the gap with credit cards, personal loans, and car finance. The average household in northern Europe now carries debt equal to 120 percent of annual income, up from 95 percent five years ago.
Banks call this healthy credit growth. They earn more from loan interest than from the tiny rates they pay on savings accounts. Credit firms market hard to people they know cannot truly afford the debt. No government moves to stop this. Regulators treat it as normal market function. Pension funds and insurance companies depend on the returns these loans generate, so stopping the debt spiral would hurt retirement funds and premiums. The system feeds itself.
Meanwhile, workers face a simple choice: go without or go into debt. Buy food on credit or skip meals. Heat the house or shiver. Drive to work or lose the job. Most choose debt because the alternative means poverty. Companies count on this desperation when they argue wages cannot rise, because workers need the jobs too badly to bargain. Debt makes people docile.
The math cannot hold. People cannot borrow forever against wages that do not rise. At some point, many will default, and banks will face losses. Governments will then bail out the banks while workers lose their homes and cars. This has happened before. Nothing suggests it will not happen again.
In famylje yn Rotterdam kocht foarige moanne in auto dy't se net rjochtstreeksk betelje koe, dus se lienen foar op 7,8 persint rinte. Trije moannen earder wiene harren leanen fries steld, wylst de kosten foar iten en elektrisiteit mei 15 persint stigen. Dit tafere herhaalet har yn stêden en doarpen oer hiel Europa. Húshâldingsskulden binne dit jier mei 8 persint stigen, officiele sifers litte sjen, wylst gemiddelde leanen mar 2,3 persint groeid hawwe. Wurkers falle efter, dus se liene om gelyk te gien.
De gat bestiet mei opset. Sintrale banken hèlden rentestielen jierentang leech, ferheegje se se der nei skerp as ynflaasje taslach. Dizze tiid fan goed gald einde, mar prizen foar wenje, enerzjy en waar fiele nea werom. Wurkers dy't itselde gald fertsjinje, sjogge no rekkens dy't folle mear koste. Se fylje de gat mei kredytkaarten, persoanlike lienen en autoleasing. It gemiddelde húshâlding yn Noard-Europa dreit no skulden gelyk oan 120 persint fan it jaarynkommen, op fan 95 persint fijf jier lyn.
Banken nimme dit sûnde kredytgroei. Se fertsjinje mear oan rinte op lienen as oan de lytse rentes dy't se op sparjerekkenings betelje. Kredytbedriuwen advertearje heard nei minsken dy't se witte dat dizze skuld net echt betelje kinne. Gjin regjearing stopt dit. Regelaars behandle it as normale merkfunksje. Pensjoenfûnsen en ferzekeringsmaatskipijen hingje ôf fan de opbringsten dy't dizze lienen oplevere, dus it stoppjen fan de skuldspiraal soe pensjoenarranzjeminten en premjes skadigje. It systeem voet himsels.
Mittiidtiid hawwe wurkers in ienfâldige kar: sûnder gien of skulden meitsje. Iten op kredyt keapje of oerslaan. It hûs fermearme of bibber. Nei it wurk ride of it wurk ferlize. De measte kieze skuld omdat it alternatyf poverteit betsjent. Bedriuwen rekkenje hjiryn as se stelle dat leanen net kinne stije, omdat wurkers de banen te wanhopich nedich hawwe om te ûnderhannelje. Skuld makket minsken tam.
De wiskunde giet net op. Minsken kinne net ivichtiid tsjin stijende leanen liene. Op ien momint sille in sokat stân, en banken sille ferlies lide. Regearrings sille der dan de banken reizgje wylst wurkers harren húzen en autos ferlize. Dit is earder bard. Neat suggereert dat it net opnij gebarre sil.
Published July 19, 2025 · Frisian News · Ljouwert, Fryslân