Luxembourg Tops EU GDP Table

by Ulrika Lomas, Tax-News.com, Brussels

16 June 2005

Figures for GDP per head for 2004 at Purchasing Power Parity issued by the EU show a range of more than 5:1 between the richest and poorest countries.

GDP per capita in Luxembourg was more than twice the EU25 average in 2004, while Ireland was nearly 40% above average; Cyprus was 18% below average and Malta 28% below.

Denmark, Austria, the Netherlands, the United Kingdom and Belgium were around 20% above average. Sweden and Finland were about 15% above average, and France and Germany around 10% above average. Italy was about 5% above the EU25 average.

Spain was just below the EU25 average, with Greece and Slovenia about 20% below average. Portugal and the Czech Republic were around 30% below average, and Hungary 40% below. Slovakia, Estonia, Lithuania and Poland were around half the average, while Latvia was about 55% below the EU25 average.

These figures for GDP per capita, expressed in terms of purchasing power standards4 (PPS), are published by Eurostat, the Statistical Office of the European Communities.

The Statistical Office says: 'GDP, and thus per capita GDP, are indicators of a country's total economic activity, and are therefore a way of measuring and comparing the degree of economic development of countries. GDP is not synonymous with the income ultimately available to private households in a country. EU Member States are currently adapting their national accounts to comply with methodological improvements agreed upon internationally. One important change is the allocation of “financial intermediation services indirectly measured” (FISIM) to user sectors. The implementation dates, however, differ between Member States. This will have an impact on the comparability of data during the transition phase.

'Germany, Spain, France and Austria have introduced this allocation already, and other Member States will follow in the coming months. To the extent that FISIM are recorded as final consumption and net export, GDP levels increase. For the four Member States who have already introduced this change, the increase is around 1% of GDP. 'The high level of GDP per capita in Luxembourg is partly due to the large share of cross-border workers in total employment. While contributing to GDP, they are not taken into consideration as part of the resident population which is used to calculate GDP per capita.

'The PPS (purchasing power standard) is an artificial currency that reflects differences in national price levels that are not taken into account by exchange rates. This unit allows meaningful volume comparisons of economic indicators over countries.'

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