LONDON, September 6, 2016

More than a third (37%) of Europeans are optimistic about their future standard of living over the next five years. But over a fifth (23%) are pessimistic, leaving a net optimism balance of only 14%. There are sharp divisions on personal goals and expectations depending on background, income, their personal circumstances and where they live.

The findings come from a new report from ING and Motivaction1, Bridging the Empowerment Divide, which is part of ING’s ongoing Think Forward Initiative to help people make smarter financial decisions. The study was conducted among over 13,000 people in 13 countries and explores their values in life, views on goal setting and standard of living.

There are clear divisions within society, with stark differences at a country and regional level in terms of expectations of standard of living over the next five years. In general, people’s expectations reflect their experiences over the last five years.

In the faster growing Eastern economies people are generally more positive about the future as the economies continue to mature, while a lacklustre recovery in Western Europe leaves people less optimistic.

Among the more crisis-hit economies, Spain is a dramatic exception to the pattern of expectations reflecting past experience. Following a robust economic rebound, a net balance of 54% of people in Spain are now optimistic about their living standards, matching the continued optimism of those in China. In contrast, people in France, Belgium and Italy are far more pessimistic, reflecting the economic and political challenges facing these countries. Optimism for improvement in the UK is also relatively low.

Expectations in Europe as a whole (37%) also lag behind the USA and China, where expectations about standard of living are much more positive (45% and 64%), reflecting the relative strength of these two superpowers.

These cross-country divergences stem from dramatic differences in personal experiences. People’s expectations about the next five years strongly reflect their experiences in the last five. 60% of those feeling better off from the last five years are optimistic about the future, while over half (53%) of those feeling worse off expect their situation to deteriorate further – painting a picture of rising inequality.

Rising standards of living and greater optimism are more prevalent among higher income and highly educated groups, who in turn are also more likely to set financial goals. The study reveals a strong correlation in Europe with respect to people’s ability to keep up with the complexities of modern life and personal goal setting.

There is a stark divide between those who have set financial goals and those who have not. Of the 45% of respondents with clear financial goals, almost half (47%) are optimistic about their future, in contrast to 29% of those without. Optimists not only more often have clear financial goals, they are more goal oriented in general – 43% indicate that they also have clear personal goals and 46% have clear professional goals. For pessimists these figures are only 27% and 21%.

People who don’t have clear financial, professional or personal goals are mostly found among the lower income classes, the lower educated and older people – and it is this group who are most pessimistic about the future, feel discouraged and tend to focus on the here and now.

Mark Cliffe, Chief Economist, ING commented: “Sluggish growth in Europe is clearly linked to the growing divide between people’s economic experiences, and we see this divide reflected in their expectations. Those who have fared worse over the past five years typically expect it to continue, and are far less likely to set financial goals, while whose have benefited are more likely to.

“With the recent economic crisis threatening the survival of the welfare state around the globe, the shift to self-reliance means those without the tools to look after themselves are being left behind. Alienation in society is extending to personal finances – and businesses, as well as governments, will have to confront this reality.”

Martijn Lampert, Research Director Glocalities at Motivaction: “The study shows a clear picture of inequalities in Europe. We identified a significant group of Europeans that feel isolated in the economic and social domain. People who don’t have clear financial, professional or personal goals are overrepresented among the lower income classes, the lower educated and older people. Especially this group is pessimistic about the future, feels discouraged and focuses on the here and now. There is a strong divide in Europe with respect to competences and goal setting. Europeans who actively take control and set goals for themselves are better able to keep up with the complexities of modern life and ensure a better future than people who don’t.”