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Home arrow Market Research Findings arrow General Finance arrow Rich and poor are often close neighbours
Rich and poor are often close neighbours PDF Print E-mail
Written by GFK   
02 May 2005

Rich and poor are often close neighbours

GfK survey of purchasing power in over 1,600 European regions

Nuremberg, 3 May 2005 - Liechtenstein, Luxembourg and Switzerland are oases of prosperity in Europe. Liechtenstein has more than double the disposable income per capita of Germany. People in Central and Eastern Europe earn much less than those in other European countries and the lowest level of purchasing power is in Moldavia with an average of EUR 280 a year.

Liechtenstein leads the field in Europe with an average annual disposable net income per capita of around EUR 42,000, followed by Switzerland with EUR 25,691, Luxembourg with EUR 25,210 and Norway with around EUR 20,000. In 10th place, Germany ranks behind Denmark and the UK with an average annual income of EUR 17,087 per capita. In terms of the various individual regions in Europe, 15 of the 18 wealthiest regions in Europe are in Switzerland. Geneva takes the top spot with average purchasing power of around EUR 32,000.

Central and Eastern Europe is the region with the lowest income levels

At the bottom of the rankings are the countries in Central and Eastern Europe, although in some cases there are stark differences between them. Slovenia has the highest income in the region with EUR 8,391 per annum, while people in Belarus have to manage on an annual average income of EUR 578, Ukrainians with EUR 515 and Moldavians with only EUR 280. Even the EU accession candidate countries, Romania and Bulgaria, only have a purchasing power per capita of EUR 1,661 and EUR 1,544 respectively.

In the European Union, the leader, Luxembourg, is followed by Ireland with around EUR 18,000 and Austria with EUR 17,699. At the other end of the scale, Slovakia and Latvia have an income of less than EUR 3,000 a year.

Inflation-adjusted purchasing power: differences between countries less pronounced

In an international comparison, it is useful to take account of the cost of living and price level in the individual countries. As the price level in affluent countries is significantly higher than in countries with a low level of purchasing power, the differences in prosperity between the various countries are less pronounced.

Switzerland, which ranks in the number 2 spot in Europe in terms of nominal purchasing power, drops to number 3 with EUR 19,700 when the figures are adjusted for inflation and is some way behind Liechtenstein and Luxembourg. Next is Austria, followed by the UK, France, Norway, Belgium and Germany, where the inflation-adjusted purchasing power stands at between EUR 16,000 and almost EUR 18,000. This assessment also shows Albania, Belarus, Ukraine and Moldavia as the poorest countries in Europe.

Big differences in income within countries - example Poland

However, there are also big differences in income within individual countries themselves, for example in the 45 Polish Pod regions. While the purchasing power of people living in the Warsaw area for example is 55 per cent above the Polish average, people in some of the eastern regions of Poland are more than 20 per cent below that average.

At the German-Polish border, the income gap is huge, even taking account of the difference in price levels: while Poles have an average disposable income of EUR 6,949 per annum, their German neighbours have EUR 16,207. There is also an income gap on the eastern borders of Poland, but this time the situation is reversed and Poland is ahead of Belarus (EUR 1,815) and the Ukraine (EUR 1,853).

The survey

The results come from the GfK Europe Report 2005 published by GfK Regionalforschung, which covers over 1,600 regions in 47 countries. In addition to purchasing power data, the report includes information on socio-demographics, industry, retail, employment, transport, the residential property and construction sectors as well as details of the gross domestic product. The purchasing power surveyed is the net income including state benefits. The euro purchasing power parities take account of the price level and cost of living in the respective countries.

The GfK Group

The GfK Group is the No. 5 market research organization worldwide. Its activities cover five business divisions, Custom Research, Retail and Technology, Consumer Tracking, Media and HealthCare. In addition to 13 German subsidiaries, the company has over 120 subsidiaries and affiliates located in 61 countries. Of a current total of around 5,500 employees, approx. 1,500 are based in Germany. For further information, visit our website www.gfk.com

 
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