MEP on ways to avert future credit crunch

Teaching children about basic finance so they avoid getting into bad debts at a later age is the aim of a leading MEP. Bulgarian Socialist Iliana Iotova has also raised concern about children taking loans their parents are unaware of and mortgages where people don't understand the small print.

The 44-year old former journalist believes that “financial education has to begin already in the primary school” and that the European Union should set aside a specific budget for financial education. She proposes €1.5 million. This would have common principles and be similar right across Europe.
 
Easy credit and child loans worrying
 
We put it to Ms Iotova whether more awareness could actually help people avoid such crises? She was emphatic: “I am convinced. One of the main causes of the crisis is the over-indebtedness of the population and this came from the United States. Our studies show that Europe is heading the same way as the U.S. - more credit is being taken and less is being repaid.”
 
She went on to say: “Another worrying phenomenon is that children take loans (like for shopping on the Internet) that parents cannot control. Another problem is the fashion in Europe for mortgaging of housing. Many people are not sufficiently financially literate and do not understand the small print in the contract for a home mortgage or loan and subsequently it appears that people can not repay these credits. ”
 
Watch the household budget
 
As well as drawing on the lessons of the crash of 1929, Ms Iotova also says: “What I recommend to each household is to pay attention to the household budget: how much do we spend on electricity, food, heating - do we really need the things we are buying? I recommended being more cautious about our money and educating the children on the merits of saving.”
 
However, she ends on a positive note: “I am sure that this crisis will be overcome - we see the results of the meeting of the eurozone members and their will for solidarity. And those sceptical of the European Union and the Reform treaty can now see why it is worthwhile to have the EU.”
 
In early October fellow Members of the cross party Internal Market Committee backed her proposals. The full parliament will vote on them in November.