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SMS loan defaults at record high: report

The Swedish Enforcement Authority (Kronofogden) received notice of 46,000 unpaid text message loans in 2009, an increase of 30 percent on 2008.

Published: 3 February 2010 08:54 CET

“We have received several reports of people taking these loans to pay other bills and debts, especially now during the recession,” Janne Åklerlund at the authority said in a statement on Wednesday.

The authority has expressed concern in recent years that even those with poor credit are able to secure loans.

“We hope that our proposals will be adopted within the legislative proposition that the government has submitted for referral, including the tightening up of credit checks and to reduce the incidence of text message loans being a fast track into debt,” Åkerlund said.

The authority however welcomed the news that the proportion of defaults by young people continues to decline. In 2009 the number of applications submitted directed at those aged 18-25 also declined in real terms.

“We can finally see that the trend concerning young people has been broken. We hope that the change is not temporary.”

The Enforcement Authority is accountable to central government, but operates as an autonomous public authority. The authority supervises bankruptcies, collect debts, offers debt relief and is responsible for preventive action.

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Court turns down AfD-led challenge to Germany's spending in pandemic

Germany last year ratified the €750-billion ($790-billion) fund, which offers loans and grants to EU countries hit hardest by the pandemic.

The court in Karlsruhe ruled on two challenges, one submitted by a former founder of the far-right AfD party, and the other by a businessman.

They argued the fund could ultimately lead to Germany, Europe’s biggest economy, having to take on the debts of other EU member states on a permanent basis.

But the Constitutional Court judges ruled the EU measure does not violate Germany’s Basic Law, which forbids the government from sharing other countries’ debts.

READ ALSO: Germany plans return to debt-limit rules in 2023

The judgement noted the government had stressed that the plan was “intended to be a one-time instrument in reaction to an unprecedented crisis”.

It also noted that the German parliament retains “sufficient influence in the decision-making process as to how the funds provided will be used”.

The judges, who ruled six to one against the challenges, did however express some reservations.

They questioned whether paying out such a large amount over the planned period – until 2026 – could really be considered “an exceptional measure” to fight the pandemic.

At least 37 percent of the funds are aimed at achieving climate targets, the judges said, noting it was hard to see a link between combating global warming and the pandemic.

READ ALSO: Germany to fast-track disputed €200 billion energy fund

They also warned against any permanent mechanism that could lead to EU members taking on joint liability over the long term.

Berenberg Bank economist Holger Schmieding said the ruling had “raised serious doubts whether the joint issuance to finance the fund is in line with” EU treaties.

“The German court — once again — emphasised German limits for EU fiscal integration,” he said.

The court had already thrown out a legal challenge, in April 2021, that had initially stopped Berlin from ratifying the financial package.

Along with French President Emmanuel Macron, then chancellor Angela Merkel sketched out the fund in 2020, which eventually was agreed by the EU’s 27 members in December.

The first funds were disbursed in summer 2021, with the most given to Italy and Spain, both hit hard by the pandemic.

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