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News : Irish Economy Last Updated: Dec 14, 2012 - 4:09 PM


Irish Economy: Actual Individual Consumption per capita in Ireland at EU average; Germany at 20% above
By Finfacts Team
Dec 14, 2012 - 3:52 PM

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Country abbreviation details in report

Irish Economy: Actual Individual Consumption (AIC) per capita, a better measure for the standard of living in Ireland than  gross domestic product (GDP), because of distortions caused by the dominant multinational sector, is just above the EU average. The EU member state with the second highest AIC per capita is Germany at 20 % above the average, around the same as its gross domestic product (GDP) per capita. Ireland's AIC per capita is only marginally above the average EU27 level, while GDP per capita is 29 % higher than the average. Ireland ranks with Italy at 101 compared with a EU average of 100.

In 2011, the GDP per capita in Luxembourg, expressed in purchasing power standards (PPS: the Purchasing Power Standard is an artificial currency unit that eliminates price level differences between countries. Thus one PPS buys the same volume of goods and services in all countries. This unit allows meaningful volume comparisons of economic indicators across countries.), was more than two and a half times the EU27 average. The Netherlands, Ireland, Austria, Sweden, Denmark and Germany were between around 20% and 30% above the EU27 average, while Belgium and Finland were between 10% and 20% above average. The United Kingdom and France registered GDP per capita nearly 10% above the EU27 average, while Italy and Spain were around the average.

Luxembourg has a very high GDP per capita as part of its workforce lives outside its borders.

Cyprus was around 5% below the EU27 average, while Malta, Slovenia and the Czech Republic were between 15% and 20% lower than the average. Greece, Portugal and Slovakia were between 20% and 30% below the average, while Estonia, Lithuania, Hungary and Poland were around one third below. Latvia was just over 40% lower, while Romania and Bulgaria were between 50% and 55% below the average.

These data for 2011, 2010 and 2009, published3 by Eurostat, the statistics office of the European Union, are based on revised4 purchasing power parities, and the latest GDP and population figures. They cover the 27 EU member countries, three EFTA member countries, the acceding state, four candidate countries and two potential candidate countries.

Actual Individual Consumption per capita in the member countries ranged from 45% to 140% of the EU27 average in 2011

While GDP per capita is mainly an indicator reflecting the level of economic activity, Actual Individual Consumption (AIC) per capita is an alternative indicator better adapted to describe the material welfare situation of households.

Generally, levels of AIC per capita are more homogeneous than those of GDP but still there are substantial differences across the member countries. In 2011, AIC per capita expressed in PPS ranged between 40% above the EU27 average in Luxembourg and 55% below average in Bulgaria.

Eurostat says indicators reflecting directly the situation of households are more adapted than GDP to reflect welfare. The level of consumption per head is one of these. In national accounts, Household Final Consumption Expenditure (HFCE) denotes expenditure on goods and services that are purchased and paid for by households. Actual Individual Consumption (AIC), on the other hand, consists of goods and services actually consumed by individuals, irrespective of whether these goods and services are purchased and paid for by households, by government, or by non-profit organisations. In international volume comparisons of consumption, AIC is often seen as the preferable measure, since it is not influenced by the fact that the organisation of certain important services consumed by households, like health and education services, differs a lot across countries. For example, if dental services are paid for by the government in one country, and by households in another, an international comparison based on HFCE would not compare like with like, whereas one based on AIC would.

Substantial cross-European differences in GDP per capita: Consumption and price levels varied by more than three to one [pdf]

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