Europe’s enormous differences

+Average purchasing power per capita in Spain is almost three times as great as Poland’s average purchasing power. But comparisons between countries are not very informative. Per capita purchasing power in Warsaw, Poland’s capital city, is EUR 12,473, which is considerably more than the population in the Andalusian region of Spain at EUR 10.985 per head per year. As GfK points out in its annual purchasing power comparison, inter-comparisons always depend on whether they are between whole nations, regions or even individual towns and cities.

Looking at the totality of the 28 EU member states, the outcome in the past year was a nominal 1.9% increase in per capita purchasing power to EUR 16,439. Purchasing power is understood to mean the population’s net income including state transfer payments such as pensions, unemployment benefit and child allowance. The population uses this available income to meet all its expenses for food, housing, services, holidays, insurance, private old age provision and their consumption needs.

The only negative outlier was provided by Great Britain with a minus 1.5% change in purchasing power, but even that is due mainly to the change in currency parities with the Euro. GfK makes the comparisons in Euro.

Purchasing power in the whole of Eastern Europe, on the other hand, made powerful gains. It was as much as 7.8% in Romania, although one must also take into account the fact that average per capita purchasing power there is only EUR 4,556, i.e. far below the EU average. It is possible that foodstuffs produced there also cost significantly less than in this country, but a large prosperity gap remains between Western and Eastern Europe.

A large proportion of purchasing power is spent on consumption in one form or another, so it’s not surprising that the retail in Europe’s 28 member states experienced a thoroughly good year in 2017. The low interest policy put consumers in a buying mood. Calculated in Euro, the Czechs rewarded their overthe-counter retail trade with a 9.8% sales upturn, followed by Romania, where the 9.3% rise was not much less. If national currencies are used as the yardstick instead of the Euro, Romania took first prize with an 11.3% increase in over-the-counter retail sales growth.

The British were again the black sheep. Although retail business there enjoyed a 2.5% growth in sales when calculated in Sterling Pounds, it turns into a major decline of 4.2% when recalculated into Euro. Both figures are an inadequate reflection of the retail companies’ real position, because a considerable part of the goods they sell needs to be imported, and on the other hand the worsened currency exchange rate does not affect everything. Stilton and Shropshire cheeses continue to be made from milk from British cows. Ignoring

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