The prosperity gap in the EU is growing

The economic divergence is growing among EU countries. Rich countries get richer as compared to the average and the poor getting poorer. The EU’s efforts to achieve economic and social convergence is put in question. 

Ten of the twelve EU countries, where the inhabitants already had more-than-average purchasing power in 2004, managed to raise their wealth even more or to at least maintain the previous level in 2005. 

Eurostat’s latest so-called nowcast for purchasing power parities tells of this score, and also shows that five out of the thirteen countries that are below the EU average grew even poorer, while another six remained on the same level. Cyprus, Slovenia, Estonia and Poland were the four countries with lower-than average purchasing power, which managed to get closer to the EU average. 

GDPinPPS_04_05b.png

Gross Domestic Product in Purchasing Power Parities, 2004 and 2005 (EU25 = 100; figures above graphs are for 2005)

Source: Eurostat  Graph: euractiv.com

In 2005, people living in the five poorest EU member states had on average 32.2% of the purchasing power of the ones living in the five richest countries – almost 1% less than a year before, when they still had 33.1 % of what the richest Europeans had. 

The figures are even more extreme when the countries which hope to join the EU next year are taken into account, and when one looks at single countries: In 2004, inhabitants of Bulgaria could, in their own country at local prices, afford to buy only 12.1% of what people living in Luxembourg could buy in theirs. One year earlier, the figure had still been 13.5%.

Purchasing Power Parities are exchange rates created to take different price levels in different countries into account. They are based on the price for the same sample basket of goods in each country. 

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