Ireland makes more than twice as much GDP per capita as EU average

Facts4EU asks “So why aren’t the Irish all driving around in Bentley convertibles?”

Montage © Facts4EU.Org 2023

EU’s latest GDP per person numbers show huge disparity across the bloc

In the latest EU figures published last week for 2022, GDP per capita expressed in purchasing power standards (PPS) put Ireland in second place in the table, with its GDP per person being more than twice (+134%) the EU27’s average.

The figures for the 27 countries ranged from a low of 59% of the EU average in Bulgaria to a high of 261% in Luxembourg and showed a huge disparity across the bloc.

Brexit Facts4EU.Org Summary

GDP per capita expressed in purchasing power standards

Index : EU average=100

Luxembourg : 261
Ireland : 234
Denmark : 136
Netherlands : 130
Austria : 125
Belgium : 121
Sweden : 119
Germany : 117
Finland : 109
United Kingdom : 102¹
Malta : 102
France : 101
EU27 AVERAGE : 100

[Source: EU Commission’s statistics agency (Eurostat), 23 Mar 2023. ¹Note: Eurostat's information only shows the UK's number for 2021.]

The vertiginous slope in the EU’s ‘Level Playing Field’

The front runners Luxembourg and Ireland were followed at a distance by Denmark (36% above the EU average), the Netherlands (+30%), Austria (+25%), Belgium (+21%), Sweden (+19%) and Germany (+17%).

In contrast, Bulgaria (41% below the EU average), Slovakia (33%) and Greece (32%) registered the lowest Gross Domestic Product per capita.

Why Ireland? Why Luxembourg?

Ireland: The high level of GDP per capita in Ireland can be mostly explained by the presence of large multinational companies holding intellectual property. The associated contract manufacturing with these assets contributes to GDP, while a large part of the income earned from this production is returned to the companies’ ultimate owners abroad.

Ireland has been successful in attracting companies such as Google as a result of it having the lowest rate of corporation tax (12.5%) in the EU. This contrasts with the UK’s rate which has just been increased from 19% to 25% by the Sunak-Hunt government.

Luxembourg: 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.

How these things are measured

In international comparisons of national accounts data, like GDP per capita, it is desirable not only to express the figures in a common currency, but also to adjust for differences in price levels. Failing to do so would result in an overestimation of GDP levels for countries with high price levels, relative to countries with low price levels.

Once this adjustment is made even the EU Commission’s own statistics body is forced to admit :

“The dispersion in GDP per capita across the EU Member States is quite remarkable.”
- Eurostat, 23 Mar 2023

Observations

The reason the Irish aren’t all driving around in Bentley convertibles

Ireland’s GDP per capita is flattered by the presence of multinational companies using the country as their tax base in Europe. This has a major benefit to the Irish government in terms of its total revenue from corporation tax.

When it comes to the wider economy of the Republic, however, the presence of these multinationals for tax purposes does not translate into hundreds of thousands of jobs in Ireland itself. The reason is a subject hotly contested by the multinationals, and it relates to where the ‘work’ is actually done and where the money is earned.

For the avoidance of doubt, Facts4EU.Org is quite sure that all the multinationals involved are in full compliance with all the tax laws in the jurisdictions in which they operate.

And finally for the Irish....

Ireland is now a net contributor to the EU. The Irish now pay in more than they get back, after years of being on the receiving end of money paid in by the British taxpayer. It will be interesting to see how the Irish people react once they know that they are now subsidising other EU countries.

And when the EU Commission get their way and stop the Republic from having a highly competitive corporation tax rate, the Big Tech companies will look to go elsewhere and tax revenues will start to reduce, meaning increased taxes for the citizens of the Republic of Ireland.

We must get reports like this out there

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[ Sources: EU Commission statistics agency (Eurostat) | Bentley Motors ] Politicians and journalists can contact us for details, as ever.

Brexit Facts4EU.Org, Tues 28 Mar 2023

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Reader Comments 18

1. Sparky , Tuesday, March 28, 2023, 06:18:

Interesting piece and observations. It will also be interesting to see how the Northern Irish react over time to the position they are now in as a result of Brexit. High GDP in the Republic of Ireland on one side and a border with the UK on the other. An OBR report of 15 March reviewing their Brexit forecasting conclude that they “have not revised our view that productivity will be 4 per cent lower in the long run than if the UK had remained in the EU”

2. Captain Thunderbolt , Tuesday, March 28, 2023, 06:58:

1. Sparky , Tuesday, March 28, 2023, 07:18:
How many times have the OBR forecast been right?
There is no way to know if this is correct would GDP jump 4% if the UK rejoined.....I think not.

3. Sparky , Tuesday, March 28, 2023, 07:16:

2 CT. The OBR answered that question themselves on Laura K last Sunday. It is a forecast, like the weather, with many variables, however Liz Truss demonstrated the importance of OBR forecasting by not including them in her disastrous mini budget last year. Kwasi K also but he’s now busy looking for £10K Per day income whilst representing his constituency as an MP.

4. Gazzablack , Tuesday, March 28, 2023, 08:12:

4, Sparky
.
In November the OBR forecast a net borrowing requirement of £177 billion for 22/23.
Now they're saying £99 billion.
They've just changed their 2023 forecast from -1.3% to +0.3%.
.
If they cannot produce reliable ballpark forecasts covering such a short timeframe, then you can take it as read that they cannot do so for the 15 year period that their 4% measurement covers.
.
Since 2010, the UK has grown faster than all major European countries and faster than the G7 average - says the IMF
.
The global economy has been turbulent, but we have come through better than most.

5. Sparky , Tuesday, March 28, 2023, 08:57:

4 G. How are the Brexit forecast casts working out?

6. Captain Thunderbolt , Tuesday, March 28, 2023, 09:42:

5. Sparky , Tuesday, March 28, 2023, 09:57:
4 G. How are the Brexit forecast casts working out?
-
Which forecasts
Besides the BRINO that Sunak has entered into the rUK is doing just fine considering the global economy woes

7. Captain Thunderbolt , Tuesday, March 28, 2023, 09:58:

Sparky
Since you want to compare to the weather well I think they at least get it mostly right compared to OBR
How are meteorologists able to predict weather conditions more than a week out? Are these predictions even reliable?
We use the same global numerical weather prediction models that are used for short term forecasts. However, the error in these model solutions grows quickly so that we generally can not provide consistently reliable, detailed forecasts beyond 7 days; in fact, 5-day forecasts can be “iffy”.
Why? The atmosphere behaves in a non-linear fashion. Small errors in measuring the initial state of the atmosphere, coupled with not being able to explicitly model important small-scale processes like precipitation, turbulence, and clouds, AND having to approximate the solutions to the primitive equations used to model the atmosphere, all lead to the accelerating growth of forecast error with time.
Jeff Fournier meteorologist Florida state university

8. KB , Tuesday, March 28, 2023, 11:36:

One of the advertised Brexit Benefits was that we would be able to stop global corporations routing profits out of the UK via Ireland and other countries.
We would then benefit from the increased tax take (and of course Ireland et al would no longer benefit from taxes on UK-derived profits).
Post Brexit, this topic has gone quiet. No-one seems interested in doing this anymore.
Why is that?

9. Captain Thunderbolt , Tuesday, March 28, 2023, 12:52:

That’s Singapore on the Thames
Hunt shot that down with plans to increase the corporate tax rate to make the UK even more less appealing

10. jon livesey , Tuesday, March 28, 2023, 14:52:

1. Sparky , "It will also be interesting to see how the Northern Irish react over time to the position they are now in as a result of Brexit." Brexit was voted six years ago and support for unification is still only 27% in NI. D you ever look anything up before you post your la-e-da hypothetical questions?

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