The debt crisis made the distribution of wealth even more unequal in Greece and other EU countries that experienced the sovereign debt crisis, according to the European Central Bank (ECB).
The sovereign debt crisis left a deep mark on wealth distribution in Greece and other eurozone countries at the centre of the crisis. In this group, the share of total net wealth held by the wealthiest 10% rose from 46% in 2010 to 51.8% in 2023, according to an ECB analysis.
The study covers Greece, Cyprus, Spain, Ireland, Italy and Portugal. It shows that inequality rose more sharply and remained high for longer in the countries hardest hit by the crisis. In 2023, the Gini coefficient (which measures inequality) for the six-country group stood at 65.9 points, compared with 61.5 in 2010. By contrast, in the other eurozone countries, the Gini fell from 71.8 in 2010 to 69.7 in 2023.
The gap widened mainly during the crisis years. As house prices collapsed, households that had borrowed to buy a home saw the value of their assets fall, while their debt remained.
Lower-income households ran down their savings, while equities, held mainly by wealthier households, rebounded more quickly. Later, the decline in homeownership, particularly among younger people, limited many households’ ability to benefit from the recovery in property prices. The downturn and falling incomes thus hit harder those with fewer assets to absorb the losses.
The recovery in property prices has not been enough to reverse this trend. In the six countries, homeownership fell, particularly among younger households. Fewer people were therefore able to benefit from the rise in prices after the crisis. Poorer households also took longer to rebuild their savings.
Inequality in the group continued to rise until 2021 and remained at the same level in 2023. In the other eurozone countries, by contrast, the Gini in 2023 was 2.1 points below its 2010 level. The comparison shows how persistent the effects of the crisis were in the countries hardest hit.
The ECB notes that the figures relate to net wealth, meaning the value of assets after debts have been deducted. They do not prove that wealthier households became richer in absolute terms or that poorer households lost wealth in absolute terms. They do show, however, that the share of total wealth held by affluent households increased, while the share held by the poorest half declined.
The authors of the analysis, Danilo Bianco, Jiri Slacalek and Oreste Tristani, used data from the Eurosystem’s Household Finance and Consumption Survey. The survey covers about 90,000 households in 22 countries and records, among other things, their wealth, income and debt.
SOURCE: ANA