Purchasing power 2023
Noticeable increase in nominal spending potential in Europe
The inflation rate continues to fall and purchasing power in Europe has increased significantly for the second year in a row. In 2023, the nominal purchasing power of EU citizens grew by an average of 5.5 percent to 19,786 euros per capita. This continues the positive trend of the previous year, which saw a 7 percent increase. Overall, the inhabitants of the 27 EU member states had a purchasing power of around 8.9 trillion euros at their disposal, which could be used for food, housing, services, energy costs, private pensions, insurance, vacations, and mobility. However, the increase in purchasing power did not fully compensate for the rise in the cost of living. Purchasing power grew less strongly than forecast by research institutes and was unable to keep pace with the inflation rate.
The development of purchasing power in the individual EU countries was characterized by heterogeneity in 2023. Luxembourg (40,931 euros per inhabitant) and Denmark (32,490 euros per inhabitant) maintained their position as the countries with the highest purchasing power, while Bulgaria (8,629 euros per inhabitant) overtook Romania (7,738 euros per inhabitant) for the first time. Luxembourgers continue to have more than twice the EU average and well over five times the purchasing power of Romanians.
However, it is worth noting that countries on the Balkan Peninsula, which have the lowest purchasing power, have the highest growth rates within the EU. This leads to a reduction in regional disparities in Europe. Other EU countries on the southern and eastern periphery, in particular Spain, Croatia and Hungary, also achieved significantly above-average growth rates. This means that the distribution of purchasing power was almost 9 percent more homogeneous in 2023 compared to the pre-pandemic years.
Belgium was the only Western European country to record above-average growth at 6 percent, while all other Western European countries performed below average. Purchasing power even fell in Norway and Sweden: Swedes had to make do with 2 percent less purchasing power, while purchasing power in Norway even fell by 9 percent. The subdued propensity to consume since the COVID-19 pandemic and the weakened exchange rates of the respective national currencies are largely responsible for this. However, a look at the changes in purchasing power in Sweden and Norway in local currency shows that both countries are recording growth.
Despite these developments, Western European and Scandinavian countries still have significantly higher purchasing power compared to Eastern European countries. The high growth rates of the countries on the outer fringes of the European Union indicate that the countries with low purchasing power are slowly converging and the purchasing power gap is closing to some extent. Ukraine, which has been marked by war, continues to bring up the rear. People there only have a purchasing power of 2,478 euros per capita, which corresponds to 14 percent of the European average.
There are strong regional disparities within the European countries. The difference in purchasing power in Romania between Bucharest, the county with the highest purchasing power, and Vaslui, the county with the lowest, is 11,304 euros per person. This means that the inhabitants of the capital have almost four times as much purchasing power as the inhabitants of the last-placed county.
However, a closer look at the purchasing power of the different countries reveals some convergence. For example, there are also 5-digit postcodes in Romania whose purchasing power is 75 percent above the European average, exceeding that of many regions in Western and Northern European countries.
Take a look at the regional distribution of purchasing power in the individual European countries to get more insights.
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