- The Washington Times - Saturday, December 27, 2003

Britain is now the richest of the big European countries, measured by gross domestic product per capita — ahead of Germany, France and Italy — but several small countries are far richer.

Wealthiest of all, according to figures issued last week by Eurostat, the statistical service of the European Union, is Luxembourg, with GDP per capita at 189 percent of the EU average. But Luxembourg’s figures are heavily distorted by the large proportion of its work force that commutes in from homes just across the border in France, Germany or Belgium.

Ireland ranks as second-most wealthy at 125 percent, followed by Denmark (113 percent), the Netherlands and Austria (111 percent), Britain and Belgium (107 percent), France and Sweden (105 percent), Finland (102 percent) and Germany (100 percent).

Italy (98 percent), Spain (86 percent), Greece and Portugal (71 percent) are all below the EU average.

But the new member states from Eastern Europe, who formally join the European Union on May 1, are on average less than half as wealthy as the current EU countries. The poorest, Latvia, has a GDP per capita only one-third of the EU average.

Candidate countries expected to join in the future — Romania, Bulgaria and Turkey — are closer to one-quarter of the EU average wealth per capita.

Long the economic locomotive of Europe and still the biggest economy, Germany’s average performance in the EU listings is sobering. The new rankings reveal the cost of Germany’s long economic slowdown, and the impact of absorbing the lower-wage and less-productive former East Germany after the fall of the Berlin Wall. Unemployment in the former communist-run eastern provinces is double the level in former West Germany.

Britain’s success, after a long period of slow growth and industrial unrest that made it “the sick man of Europe” in the 1970s, reflects the pro-business reforms introduced by Margaret Thatcher’s Conservative government after 1979 — policies that have been broadly continued by the Labor government of Prime Minister Tony Blair since his 1997 election victory.

The Eurostat survey calculates GDP per capita in terms of purchasing power standards (PPS). It is based on a revision of the existing data for the period 1995-2000, covers the full year 2001 and includes first results for 2002. The PPS method, while deemed to be fairer and a more accurate reflection of relative wages and living costs, gives the poorer countries a more generous assessment.

Cyprus is the best performing country of the new nations set to join the EU, with 76 percent of the EU average GDP. It even does better than existing members Greece and Portugal, which both have 71 percent of the EU average.

Then follow Slovenia and Malta (69 percent), the Czech Republic (62 percent), Hungary (53 percent), Slovakia (47 percent), Poland (41 percent), Estonia (40 percent), Lithuania (39 percent) and Latvia (35 percent).

Candidate countries are further behind, with Romania at 27 percent, Bulgaria at 26 percent and Turkey at 25 percent.

The relative poverty of the EU’s new member states demonstrates the scale of the challenge the union faces in absorbing them over the coming years. In effect, the wealthier EU countries of Western Europe have shouldered a weighty development burden for their poorer colleagues. Although the EU’s population will increase by 20 percent when the new members join next year, the EU’s total GDP will rise by less than 5 percent.

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