Irish households only in EU’s third tier for real purchasing power

Irish households are only in the third rank among EU member states when it comes to real purchasing power, according to Union wide data from Eurostat. 

he purchasing power of households here is below the EU average and as much as 30pc below the wealthiest member state Luxembourg, the data shows.

For decades after joining the now EU Ireland benefited from significant structural adjustment funds because it  ranked in the lower tier of the old EU 15 member states.

But the growth of the Irish economy and EU enlargement in 2004 means Ireland is now ranked among the richer member states using the official gross domestic product (GDP) measure and is a net contributor to EU budgets.

However, data from the European statistics agency (Eurostat) published on Monday suggests Irish living standards are significantly below the wealthiest Europeans, partly because prices here are high.  

The data measured actual individual consumption (AIC) which looks at the value of consumer goods and services purchased by households or provided for them by non-profit institutions and governments. As such it is a good way to compare real living standards. 

The findings are in line with research earlier this year by former Central Bank governor Patrick Honohan, who placed Ireland as the 12th most prosperous economy in the EU 27 looking at households’ spending power in contrast to rankings that put it first in terms of GDP per person. 

Eurostat found using the ACI measure the spending power of households in Luxembourg is 131pc of the EU average with Germans and Danes close behind. 

The second tier of countries is made up of the Netherlands, Austria, Finland, Belgium, Sweden and France. Each recorded levels between 5pc and 20pc above the EU average.

The third rank of countries is made up of Ireland, Cyprus, Italy and Lithuania where the purchasing power is up to 10pc below the EU average. While Irish average incomes and spending are significantly higher than Lithuania’s the data suggests the cash here stretches nowhere near as far.

The data ranks a fourth band of countries consisting of Spain, Czechia, Portugal, Malta, Poland and Slovenia where spending power is 10pc to 20pc below average. Spending power is lower again in Romania, Estonia and Greece.

The poorest households, in terms of purchasing power are in Slovakia, Latvia, Hungary, Croatia and Bulgaria – the last of which had actual individual consumption 39pc below the EU average.

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