At the beach at Eastbourne on the south coast of the UK (Simon Roughneen)

Luxembourg is the “most affordable” country in Europe for taking out a personal loan, with Britain the priciest, going by a new analysis of official data.

Ireland and Denmark were second and third best, according to Swedish loan analysis company Lanea, whose team used data from the Organisation for Economic Co-operation and Development (OECD) to calculate repayments as percentages of disposable incomes, after accounting for expenses, salaries and bank interest rates.

The analysts, who also accessed numbers from Trading Economics and Numbeo, a “cost of living database,” found that Luxembourg’s personal loan repayment of £535.10 per month ($625.52) came to 18.98% of the cushy average disposable income of £2,819.77.

Britain was named the worst country in Europe to take out a loan, with repayments of 61.40% of the average disposable income of £249.95 per month. Greece was next, with a personal loan repayment of 59.76% of the average disposable income £118.76 per month.

Ireland’s 19.27%, based on average disposable income of £341.28 was second-best, with Denmark, where the average monthly disposable income tipped £400, third on 19.33%. Germany registered in ninth with 22.01% and £295.70.

Europeans’ real incomes have stagnated or even contracted in recent years, as salaries have lagged behind inflation, which soared in the wake of Russia’s invasion of Ukraine as necessities including food and fuel reached often record levels.

The British Retail Consortium (BRC) said on February 6 that sales growth slowed in January as the the “high cost of living” ran into a third year.

Officials have raised interest rates in response, with the European Central Bank’s 22-year high of 4.5% and Britain’s at 5.25%, in turn making loans more expensive. The OECD said on February 5 that central banks should retain high rates until inflation is brought down, which in the European Union means to 2% or below.

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