We’ve been looking at the future of banking here on Debating Europe, in partnership with ING. So far, we’ve looked at what Europeans want from banks and whether the EU should better regulate cross-border banking. However, we haven’t yet looked at consumers themselves and how they interact with banks and financial services in general.
On that note, we had a comment sent in from Eoin from Ireland, who seemed quite critical of young Europeans and their attitude to credit and debt:
My parents experienced the recession of the 1970s and 1980s, yet people did not have the expectation that people in Ireland have today; EXPECTATION is a direct result of the boom times in Ireland – the so-called ‘Celtic Tiger’. Obviously, people are paying for this today in terms of negative equity, unemployment, immigration and huge issues with personal debt.
Are young people today too quick to take on personal debt? Are they less financially responsible than their parents’ generation? To get a reaction, we took this comment to Rok Primozic, Chair of the European Students’ Union.
Rok thought that more financial education for young people might help, but he thought it was unfair to focus specifically on young people when the whole of society, including governments and older generations, have been over-reliant on debt and credit (particularly in the run-up to the financial crisis). His sentiment is echoed by a comment from Daniel, who believes that part of the problem is an excessive focus on consumerism in modern society:
Consumers are too pressured to get everything NOW. Too much credit is being used for consumption rather than investment or education; culturally we are extremely short-sighted.
We took this comment to Ian Bright, Senior economist at ING, to see how he would respond:
Ian Bright agreed that an over-reliance on credit was harmful, but went on to argue that this doesn’t mean that all debt is necessarily a bad thing, particularly when it is being used to invest in future benefits (such as a quality education).
However, like Rok Primozic, he also believed it was important for people to have a better understanding of the banking system and how to effectively budget and manage finances. In fact, a 2012 report commissioned by ING showed that, across Europe, 89% of people thought that financial education should be taught in schools.
To get some further thoughts on this matter, we spoke to Androulla Vassiliou, the EU Commissioner for Education, to see whether she thought better financial education in schools in Europe would be a good idea. She pointed out that OECD studies indicate that many Europeans lack even basic mathematics and numeracy skills, so the priority should be on improving these. Only when these minimum skill requirements are met should the focus turn to better financial education.
We also spoke to Jim Murray, President of the European Foundation for Financial Inclusion (EUFFI). He agreed that more financial education was a good idea in principal, but cautioned that there was a limit to the number of things that can meaningfully be taught in schools without overloading students:
Finally, we spoke to Said El Khadraoui, a Belgian MEP who sits with the S&D in the European Parliament. He argued that nobody really has a clear idea how financial systems work today, including regulators. However, he did support greater financial education in schools so that citizens can make more informed decisions when it comes to financial services.
Are young people today too quick to take on personal debt? Are they less financially responsible than their parents’ generation? And should better financial education be taught in schools? Or should the focus first be on improving basic mathematics and numeracy skills? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions.