Living standards fall but prices still 31pc higher than EU average

Eurostat findings contradict Government claims on competitiveness
By Aideen Sheehan
Thursday December 16 2010
OUR standard of living has dropped dramatically, new figures obtained by the Irish Independent reveal.
And as householders’ spending power plummeted, prices here have remained the second highest in the EU — and are now 31pc higher than the European average.
The findings of an official report from the Eurostat agency appear to undermine government claims that the country is becoming more competitive.

In fact, the price-gap between Ireland and the rest of Europe has actually widened since the height of the boom in 2007, the report shows.
Consumption per person — the best indicator of the standard of living as it measures both personal and government spending — has fallen dramatically since 2007 and is now lower than most western European countries. Only Denmark was more expensive than Ireland in 2009. There were huge price gaps across the board, from food and electricity to cars and crucial services.
The figures also reveal:
• Health and education were each 56pc dearer in Ireland than elsewhere in Europe;
• Cigarettes are more than twice as expensive;
• Alcohol is 67pc dearer;
• Restaurants and hotels are 41pc dearer.
According to the Eurostat figures, the only item that represents good value in Ireland is shoes, which are 10pc cheaper than elsewhere in Europe.
The gap between Ireland and the UK is even starker.
Our prices are 35pc more expensive overall: bread is 48pc dearer; electricity 26pc; health 62pc; and cars are 39pc dearer.
Overall, prices were 31pc higher than in the rest of Europe in 2009, down from the 32pc difference in 2008 but up from a 27pc price-gap in 2007.
Consumer watchdogs last night described the figures as “deeply worrying” as they showed the cost of living was still extremely high in Ireland despite claims it had been reduced.
“A lot of families are already on the verge of poverty and this is not good news for them,” said Consumer Association of Ireland chief executive Dermott Jewell.
However, the report finds that Ireland remains one of the richest countries in the EU in terms of GDP per capita adjusted to reflect purchasing power in different countries.
Irish GDP per person was 27pc above the EU norm last year — only exceeded by Luxembourg and the Netherlands.
However, this marks a sharp deterioration from 2007 levels when it was 47pc above average.
Consumption is now just 2pc higher than the EU average.
In 2007, just before the economic crisis struck, it was 13pc higher than the EU average — but countries such as Greece and Cyprus overtook us last year.
GDP per person is based on total wealth adjusted to reflect its purchasing power in each country.
However, Eurostat said it was not necessarily a good indicator of households’ standard of living which is better to measure via actual individual consumption. This looks at individual spending and the services provided for them by government which vary widely from country to country.
By that measure Ireland plummeted from sixth place in Europe to 13th last year, behind Luxembourg, the Netherlands, Austria, Denmark, Sweden, Germany, Belgium, Finland, the UK, France, Cyprus and Greece, and most of the countries which fared worse were in Eastern Europe.
– Aideen Sheehan
Irish Independent