A recent study by the Ifo-Institut, N26 and the Technical University of Munich, based on anonymized bank data, reveals that German consumers have generally coped well with the economic challenges of 2021 to 2024, but some groups still struggle with financial constraints.
While the economy has recovered, older people and those with high rent burdens are still under financial pressure, according to Sebastian Wichert, head of the Ifo Economics & Business Data Center at the Ludwig-Maximilians-University. The study found that the financial leeway of consumers has narrowed during the crisis.
The findings show that, in particular, young adults have successfully navigated the years of the Ukraine war, high inflation and rising economic uncertainty, with significant increases in spending and wages. In contrast, older people, whose incomes grew less, found it difficult to offset the higher burdens.
Rent payments remained a significant burden for households with already high living costs, even with income growth. Given these pressures and the ongoing geopolitical and economic uncertainty, the researchers do not expect significant growth in private consumption. They also foresee a continued trend of temporary negative account balances, indicating a low level of financial flexibility among consumers, who may instead focus on building savings.
In the future, the researchers believe it is crucial to keep a close eye on vulnerable groups with low incomes and high rent burdens. “A moderate increase in housing costs, support in building up savings and access to affordable credit are necessary to strengthen the financial resilience of consumers” said Wichert.
The study used anonymized bank data from N26.