Wednesday, December 20, 2006

Wealth, poverty and the expansion of the European Union

Andrew Rettman:

People in Luxembourg have on average over eight times the spending power of people in EU member-states-to-be Romania and Bulgaria, Eurostat says in a survey showing startling contrasts in wealth in the new European Union.

The study, which shows the Grand Duchy enjoys a GDP/capita level of 251 percent of the EU average while the Balkan duo have 33 and 34 percent, matches popular perception in western Europe that Romanian and Bulgarian villages are a far cry from London or Paris.

Of the old EU15 countries, Ireland, the Netherlands, Denmark and Austria lead the pack, while Slovenia and the Czech republic stand out in the new EU10, having already leapfrogged Portugal in 2005 and beginning to catch up on Greece.

But the biggest new member state, Poland, is moving more slowly and still has personal wealth levels just half the EU average, with only Latvia faring worse out of the 2004 enlargement round countries.

EU-candidate Croatia has a similar standard of living to Poland and is better off than Romania and Bulgaria.

But Turkey trails far behind at just 28 percent of the EU average GDP/capita, in a reminder of how much EU structural aid cash the country of 80 million people would require if it joined quickly.

People in European Economic Area partners Iceland, Norway (oil and gas-rich) and Switzerland (international banking centre) are all better off than the average Joe in the EU.

Meanwhile, US citizens live at 150 percent compared to the EU mean – a stratosphere transcended only by the tiny Luxembourg tax-haven.

Letting in so many poor countries is likely to make the EU weaker, not stronger, in the long term.

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