Tax and inflation lead European concerns in crisis, Schroders survey finds

Spaniards and Italians are certainly worried about the Eurozone crisis as their countries become the next focal points of the storm, but they express even more concern their governments will tax them more, as indebted countries seek alternative ways to raise cash.

About two thirds of private investors in Italy are most concerned about rising taxes, as are almost half (47%) of Spaniards – each well above the 25% level registered for all Europeans, surveyed by YouGov last quarter, in a poll commissioned by Schroders.

The poll also found Germans are far less worried about tax hikes (21%), but their citing of higher inflation as their main concern (37%) by far exceeds the European average of 27%.

One of the most effective hedges against debasement of paper money – real assets – is therefore unsurprisingly the most popular way Germans plan to invest, to tackle the crisis.

Some 38% said buying property was the main way to counteract the crisis, easily exceeding the 33% that said they would hold onto their investments and patiently sit it out, and 27% who said investments paying regular income was the answer.

Germans seem to be increasingly willing to take a more active approach to tackling the crisis, as 47% said they would simply sit out the crisis, when asked last year.

Predictably, the Eurozone crisis was a key concern of all of the six countries highlighted from the report’s findings. Among Germans, 48% said it was their main concern, 20% higher than last year.

As investors have increasingly sought the relative safety of Bunds and other core European government debt, only 27% of Germans named the persistently low interest rate environment as their chief concern. Among Austrians 29% did so, while 16% of French private investors ranked it top. In Spain and Italy, whose long-term debt yields have neared or breached 7% recently, only 23% named it first.

As the debt crisis rolls on, Europeans seem well aware of the need to save or invest their income, or pay down debts.

On average they are using almost half (47%) of their monthly income for these purposes.

There were minor differences between countries, with Germans and the French using about half their income for these ends; Spaniards using slightly more (51%); and Swedes using slightly less (46%).

Pension savings and unexpected emergencies were the most often-cited reasons for their practices.

Achim Küssner (pictured), head of Schroders‘ German operations, said: „The high savings rate among Germans is not surprising. It is, however, noteworthy that more money is being saved than invested. In a low interest rate environment investors should consider how they can achieve higher returns.

“Products that generate regular income but still invest in a risk-averse manner – for example funds with a defined distribution share class – are specially suited to this.”


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