Inflation and rising interest rates to blame
A study by credit management services company Intrum has found that 74% of Portuguese are cutting back on spending, while 30% plan to use their savings to pay everyday bills given inflation and rising interest rates.
“Although 74% are looking to cut back on daily spending and 30% plan to use their savings to pay for day-to-day expenses and bills, these are only temporary solutions. Eventually, when their money runs out, consumers will stop paying some bills,” revealed Intrum’s European Consumer Payment Report 2023 – Portugal, cited by Lusa news agency.
To carry out this study, 20,000 people were surveyed in 20 countries (around 1,000 in each), with the target group being those aged 18 or over.
Around 16% of people said they now had less money to spend, after paying bills and essential goods, than the previous year.
The study found that 22% of consumers failed to pay at least one bill on time last year.
There was an increasing number of defaults among ‘generation X’ (born between 1965 and 1980) and millenials (born between 1981 and 1996).
Nearly three in 10 people said they would feel less guilty about ignoring a bill payment now than they did a few years ago.
Meanwhile, more than 40% expect companies not to bother taking action against consumers who have overdue payments.
“As consumers’ real incomes stagnate or decline, a large proportion of consumers will have to make difficult choices about how they will cope over the next six months: 63% may cancel holiday spending and 72% say they may spend less at Christmas,” says the document.
In the last six months, one in four respondents borrowed money to pay bills and 12% may need additional credit to pay their daily expenses.
Less than 40% of Portuguese have savings equivalent to one month’s income or below, while one in five has no “cushion”.
The report also showed that 19% of people are unable to save for unexpected expenses, up from 18% in 2022 and 16% the previous year.
More than half (54%) of consumers believe that their financial situation will improve over the next 12 months and most expect inflation to continue over the next few years.
Fieldwork for the study took place between July 19 and September 1 this year.