In 2010 the standard of living in the UK was the second highest in the EU, according to the measure of Actual Individual Consumption (AIC) per head. The figures, released today by Eurostat, show that only Luxembourg has a higher standard of living.
AIC in the UK was 21 per cent higher than the EU average, with Luxembourg 50 per cent higher. Bulgaria was the lowest with an AIC 58 per cent below the EU average.
AIC is often used as a measure of households’ standard of living as it incorporates all goods and services that a household consumes regardless of whether they pay for them. However, if you look at GDP per head, which in this analysis measures how much individuals spend rather than consume, the UK drops to 10th. The disparity between GDP and AIC can be explained by public services, such as health and education, being largely government funded in the UK.
Today’s release also looks at price levels across Europe. The data show that prices in the UK were 2 per cent above the EU average in 2010. Denmark was the most expensive country in the EU (47 per cent above the EU average) while Bulgaria was the least expensive (55 per cent below).
The high GDP per capita in Luxembourg is partly due to the country's large share of cross-border workers in total employment. While contributing to GDP, these workers are not taken into consideration as part of the resident population which is used to calculate GDP per capita.