If you were to rank the richest regions of Europe, a few names would quickly, almost instinctively, come to mind: London and Paris might surely come first, followed by Scandinavian cities and other big European capitals. Austria, The Netherlands or Belgium would also be likely to reach the top 10.
Well, you’d only be half wrong.
Recently released Eurostat data ranks the richest and poorest EU regions in terms of purchasing power per capita – regional GDP compared to local market prices. Some results could easily have been predicted. Others, not so much.
Bratislava and Prague as the 6th and 7th richest EU regions
Bratislava and Prague both make the top 10 list of the EU’s richest regions. And it’s not the first time either: both Central European capitals have been among the most attractive cities in terms of purchasing power for several years in a row. According to this study based on 2016 data, Bratislava (184% of EU average) and Prague (182%) are the 6th and 7th richest EU regions.
So, who comes before? Well, as could be expected, London is the uncontested winner. Inner West London’s purchasing power per capita represents 611% of the EU’s average level – if Brexit could have one positive outcome, it’s the exclusion of London from this study and the automatic flattening of regional wealth disparities. Then comes Luxembourg (257%), Southern and Eastern Ireland (217%), Brussels and Hamburg (both at 200%). Slovakia and Czech Republic’s capital cities follow, outranking regions such as Ile-de-France (wider Paris area) or Stockholm.
No wonder Prague and Bratislava have both become, over the last decade, an attractive destination for students, businessmen, and expats of all sorts and horizons.
Prague, Bratislava, Warsaw, Budapest… and the rest?
This doesn’t, however, reflect the situation nation-wide. Both the Czech Republic (88%) and Slovakia (77%) remain well below EU average. The wealth gap with the rest of the country is impressive and upsetting: if the average annual GDP per capita in Prague reaches 35.000 euros, it stands at around 17.000 euros in the country as a whole. Unsurprisingly, Prague and Bratislava both account for over one-fourth of national GDP.
A similar situation, although slightly alleviated, can be observed in other Central European countries. If the Budapest and Warsaw regions’ relative wealth represent 102% and 109% of EU average, Hungarians and Poles’ purchasing power remains well below (around 67%, or 19.800 euros per capita, compared to 29.200 euros at the European level).
An upward – and unequal – positive trend since EU accession
One should, however, look at the trend over the years to determine whether there has been any improvement and if the famous “catching-up process” (at the heart of the 2004 and 2007 enlargements) is a tangible reality or a Euro-fantasy. Wealth disparities are one of the most divisive topics. Although these figures cannot purport to give an exhaustive picture of the issue, it may at least give us some idea of what’s happening.
Compared to the pre-accession situation, we can see a general positive trend in Central European countries. In 2003, the Czech Republic (65% of EU average), Slovakia (slightly over 50%), Hungary (60%) and Poland (below 50%) all fared much worse than they do now. The most striking improvement has been in Slovakia – the only Visegrad country to have joined the euro-zone.
Historical wealth disparities in the EU
The poorest region in the EU is the Bulgarian province of Severozapaden (29% of EU average), followed by other regions in Bulgaria, Romania and … the French overseas territory of Mayotte (33%).
Most of the newest member states remain, as of today, below EU average: the four Central European countries, as well as Bulgaria (49% of EU average), Romania (58%), Latvia (65%) or Estonia (75%). However, the East-West demarcation line doesn’t account for all wealth disparities.
Rather than geographical, a historical approach should be favoured: Greece (68%), Portugal (77%) and Spain (92%) – in other words, the 1980’s expansion wave – are also below EU purchasing power per capita standards. In what might come as a surprise, European economic powerhouses such as Italy (97%), France (104%) and the U.K. (108%) can barely keep their head above water.
At the other end of the scope, and apart from the Grand-Duchy of Luxembourg (257% of EU average), the richest EU countries are Ireland (183%) the Netherlands (128%), Austria (127%), Germany (124%) and Sweden (123%).
Any predictions for next year’s ranking?