European purchasing power climbs by a nominal 1.9 percent

European purchasing power climbs by a nominal 1.9 percent

European purchasing power climbs by a nominal 1.9 percent

The FINANCIAL -- Europeans have an average of €13,937 per person available for spending and saving in 2017. This is one of the many results of GfK’s newly released study, “GfK Purchasing Power Europe 2017”.

The available net income among the researched 42 countries varies enormously: Liechtenstein, Switzerland and Iceland have the highest average purchasing power, while Belarus, Moldova and the Ukraine have the lowest.

In 2017, Europeans have a total of around €9.4 trillion for spending on food, accommodation, living expenses, services, energy costs, private retirement savings, insurance, vacation, mobility and other consumer purchases. This corresponds to an average per-capita purchasing power of €13,937, which indicates moderate growth of 1.9 percent and a significant improvement over last year’s figures. But some countries deviate from this average value: For example, Iceland has robust, above-average growth of more than 37 percent, while countries such as Liechtenstein and Switzerland have stagnating growth rates, according to GfK.

As the rankings make clear, the amount available to consumers for purchases varies starkly from country to country. Far surpassing the other countries in the rankings, Liechtenstein has a per-capita purchasing power of €63,267, which is more than 350 percent above the European average. With €42,142 per person, Switzerland comes in at second place. Inhabitants of this country thus have more than three times what is available to the average European. The other countries in the rankings also have above-average purchasing power that exceeds the European average by 1.5 times or more.

Seventeen countries have above-average purchasing power, including Spain, which just barely exceeds the average with €14,080 per person. By contrast, 25 countries have below average per-capita purchasing power. In the least affluent countries considered by the study, inhabitants have just €949 per person and less than seven percent of the European average. For example, the Ukraine has just one sixty-sixth of the per-capita purchasing power available to inhabitants of Liechtenstein.

Some reshuffling has occurred among the top-ten countries compared to last year, primarily due to exchange rate disparities. Luxembourg and Norway fell one slot apiece to fourth and fifth place, while Iceland moved two slots higher to third place. Germany and Sweden switched places in the rankings, with Germany pulling ahead to eighth place.

Comparison of selected countries and regions

A comparison of countries in close proximity and with similar purchasing power reveals insights into the regional distribution of purchasing potential. Below is an overview of purchasing power distribution in France, the Netherlands, Italy, Spain, Poland and Hungary. The results of the GfK purchasing power studies for these countries show large differences in per-capita purchasing power both within and between these nations.

Purchasing power homogeneously distributed in the Netherlands

The Netherlands have an average per-capita purchasing power of €18,257, which puts the country in fifteenth place and 31 percent above the European average.

This purchasing power is fairly evenly distribution among the nation’s 12 provinces. In half of the provinces, the average per-capita purchasing power deviates less than four percent from the national average. Inhabitants of the province of Noord-Brabant have €17,932 per person, which equates to 1.8 percent less than the national average.

Encompassing the capital city of Amsterdam, the province of Noord-Holland takes first place this year among the Netherlands’ provinces, surpassing Utrecht. Inhabitants in this province have €19,937 per person, which is nine percent more than the national average and 43 percent more than the European average.

A disparate picture emerges when it comes to the country’s three northeasternmost provinces: Groningen, Drenthe and Friesland. With a per-capita purchasing power of €15,989, Groningen is 12 percent below the national average, which puts it in last place. Even so, inhabitants of this province still have €2,000 per person, which is almost 15 percent more than the European average.

Purchasing power hotspots in and around Paris, France

France has an average per-capita purchasing power of €19,537, which puts it more than 40 percent above the European average and in thirteenth place, closely followed by Belgium (€19,198 per person) and the Netherlands.

France’s previous 22 regions were consolidated into just 13 regions as part of an administrative reform that went into effect on January 1, 2016. With a per-capita purchasing power of €19,522, the region Provence-Alpes-Cote d'Azur hovers right around the national average.

Only two of France’s 13 regions have per-capita purchasing power below the national average. These same two regions comprise almost one-third of the French population: Ile-de-France and Auvergne-Rhone-Alpes. The capital city region of Ile-de-France leads the rankings by a significant margin. Inhabitants of Paris and the surrounding area have €22,983 per person, which is almost 18 percent more than the national average and 65 percent more than the European average.

As was the case last year, last place is occupied by Hauts-de-France, which consists of the former regions of Nord-Pas-de-Calais and Picardie. Hauts-de-France has a per-capita purchasing power of €17,103, which is 12.5 percent less than the national average, but still almost 23 percent more than the European average.

The Germany-bordering region of Alsace was among France’s regions with the most purchasing power in the years prior to the administrative reform. Following the fusion of Alsace with less affluent Champagne-Ardenne and Lorraine, the newly formed region of Grand Est is now in tenth place among France’s 13 regions.

Spain firmly in the midfield

With a per-capita purchasing power of €14,080, Spain is just one percent above the European average. The country is relatively alone in the midfield with regard to the purchasing power values of the other countries considered by the study. No other nation comes close to the European average. Italy, the next most affluent country, has a per-capita purchasing power of €17,119, which is almost 23 percent more than the European average. By contrast, Malta, the next least affluent country, has a per-capita purchasing power of €11,648, which is more than 16 percent less than the European average.

The most average purchasing power values in Spain can be found in the northern province of Asturias: This province lies directly on the Bay of Biscay and is known for its green coastal landscape. With a per-capita purchasing power of €13,995, Asturias is 0.6 percent below the Spanish average and 0.4 percent above the European average.

Spain’s province with the most purchasing power is Araba/Alava, which toppled Gipuzkoa to take first place in this year’s rankings. Inhabitants of Araba/Alava have €18,973 per person, which is 35 percent more than the national average. Ranked in last place in 2016, the Andalusian province of Cadiz remains in that position in this year’s rankings. Inhabitants of this province have a per-capita purchasing power of €9,729, which is more than 30 percent less than the national average.

Major purchasing power gap between northern and southern Italy

Italy has an average per-capita purchasing power of €17,119. This puts the country at almost 23 percent above the European average and in sixteenth place among the 42 countries considered by the study.

Among Italy’s 109 provinces, Macerata and Pistoia have the most average purchasing power values. Inhabitants of Macerata have an average of €17,178 per person, while inhabitants of Pistoia have an average of €17,176 per person. This is 0.3 percent higher than the national average and more than 23 percent higher than the European average.

There is a clear gap in the distribution of purchasing power in northern and southern Italy. All of Italy’s provinces ranked in the top ten are located in northern Italy. Surpassing all others are the province of Milano and the fashion metropolis by the same name, whose inhabitants have a per-capita purchasing power of €23,409. This is almost 37 percent more than the national average and 68 percent more than the European average.

By contrast, the ten least affluent provinces are all located in southern Italy (from Naples southward). Last place is occupied by Crotone, which is situated in the country’s far south. Inhabitants of this province have a per-capita purchasing power of just €10,141, which is 41 percent less than the national average and 27 percent less than the European average. Average purchasing power values characterize the provinces in the country’s geographic middle (along a similar latitude as Rome).

Sharp contrasts between rich and poor in Poland

Poland has a 2017 per-capita purchasing power of €6,710. Ranked twenty-ninth, Poland has almost 48 percent of the average European purchasing power.

A closer look at the data at the level of Poland’s districts reveals extreme contrasts between rich and poor. Inhabitants of the country’s wealthiest district have three times the funds available to inhabitants of the country’s poorest district.

Among Poland’s districts, Warszawa has the highest purchasing power: Inhabitants of the Polish capital have an average of €12,472 per person, which is almost 86 percent more than the national average and 89.5 percent of the European average. With €6,681 per person, the district of Sochaczewski hovers around the national average.

The number of wealthier and poorer districts has continually increased in recent years. Twenty-two of Poland’s 380 districts have purchasing power that is at least 20 percent above the national average, which is indicative of growing affluence in some regions of the country. But the country also has 119 districts that lie 20 percent or more below the national average. The gap between rich and poor is thus becoming ever greater: Inhabitants of the poorest district Przysuski have less than 62 percent of the country’s per-capita average and just 29.8 percent of the European average.

Hungary’s purchasing power highest around Budapest and toward Austria

Hungary has an average per-capita purchasing power of €6,204, which amounts to 44.5 percent of the European average. As such, Hungary is ranked thirtieth, just below Poland.

Of Hungary’s 20 counties, seven have above-average purchasing power. These are all located in and around the capital city of Budapest and in a continuous cluster toward the Austrian border to the west. The capital city of Budapest leads the pack with €7,649 per person, which is more than 23 percent higher than the national average, but still 45 percent lower than the European average.

In last place among Hungary’s countries is Szabolcs-Szatmar-Bereg, which lies in the northeastern area of the country along the border with Romania and the Ukraine. Inhabitants of this county have a per-capita purchasing power of €4,803, which is 77.4 percent of the national average and 34.5 percent of the European average. The northwesternmost county of Gyor-Moson-Sopron on the border of Austria and Slovakia has a per-capita purchasing power of €6,326, which is just two percent above the national average.