Ireland’s standard of living below EU average
Using a new measure used to determine household wealth, Eurostat, the EU’s statistics office, has found that the Irish standard of living per inhabitant in 2014 was 10% below the EU average, and on a par with per capita living standards in Spain and Cyprus, but below those of Italy.
At the same time, price levels in Ireland were the fifth highest among the EU’s 28 member states.
In GDP terms, Ireland comes second after Luxembourg, at 32% above the EU-28 average, followed by the Netherlands at 30%.
The countries included in the comparison are the 28 EU member states, three European Free Trade Association member states (Iceland, Norway, and Switzerland), five EU candidate countries (Montenegro, the former Yugoslav Republic of Macedonia, Albania, Serbia, and Turkey), and one potential candidate (Bosnia and Herzegovina).
Norway and Switzerland have a level of GDP per capita 60% above any of its EU neighbours, while Bulgaria records the lowest level of this indicator in the EU.
The measure of standard of living used by Eurostat is Actual Individual Consumption (AIC) which consists of goods and services actually consumed by individuals.
Eurostat says AIC is often regarded as a more accurate measure of the standard of living of households than GDP.
“While GDP is mainly an indicator of the level of economic activity, AIC is an alternative indicator better adapted to describe the material welfare of households,” says the report.
“Consumption per capita may be more useful for comparing the relative welfare of consumers across various countries,” says Eurostat.
AIC per capita is usually highly correlated with GDP per capita but Ireland and Luxembourg are notable exceptions. Luxembourg has both the highest GDP and the highest AIC among EU member states.
Eurostat describes the dispersion in GDP per capita across the EU member states as “quite remarkable”, noting that Luxembourg has by far the highest GDP per capita among all the 37 countries included in the comparison.
However, the report warns against reading too much into the figures associated with Luxembourg, suggesting they may be skewed by the high level of its cross-border workforce.
“One particular feature of Luxembourg’s economy which to some extent explains the country’s very high GDP per capita is the fact that a large number of foreign residents are employed in the country and thus contribute to its GDP, while at the same time they are not included in the resident population,” said the report.
Other EU member states with a GDP per capita of more than 20% above the EU-28 average are Austria, Denmark, Germany and Sweden, together with the EFTA member state Iceland. Belgium is less than 20% above the average. Finland, the United Kingdom, and France show GDP per capita levels of up to 10% above average.
The highest AIC level in the EU was recorded in Luxembourg at 40% above the EU average. Germany and Austria were more than 20% above. They were followed by Denmark, Belgium, Sweden, the UK, Finland, France, and the Netherlands, which all recorded levels between 10% and 15% above the EU average.
