The financial crisis always prefers the south of Eurozone

It’s very interesting to study how incomes and consumption in the worst hit countries coped with the financial crisis and the concomitant severe austerity measures imposed by the ‘troika’ of auditors/lenders. The European Commission, the European Central Bank and the International Monetary Fund formed this ‘troika’ in 2010, to deal with the risk of insolvency in four EU member states namely Greece, Portugal, Ireland and Cyprus. Understandably, those countries must have paid the dearest price in terms of incomes and consumption losses. The northern EU member states were actually spared by the crisis. To study all that, Eurostat, the EU’s statistical service, published today a survey depicting the evolution of GDP per capita in purchasing power standards for the three critical years 2010, 2011 and 2012. The study covers all the 28 EU countries plus nine more European countries. The same survey also follows the evolution of the Actual Individual Consumption (AIC) per capita. According to Eurostat, “While GDP per capita is mainly an indicator reflecting the level of economic activity AIC per capita is an alternative indicator, better adapted to describe the material welfare situation of households”. Eurostat also notes that “In 2012, AIC per capita expressed in PPS ranged between nearly 40% above the EU28 average in Luxembourg and around 50% below in Bulgaria and Romania”. The rich paid no price The above statement depicts the material standing of the wealthiest and the poorest average household within the EU in the year 2012. It is of much more interest though to follow how the various countries fared in the critical period of 2010-2012. Given that the evolution of the AIC per capita is a better indicator of the actual material situation of households, let’s stick to that. Starting from the better off, during this three year period Austria, Germany, Sweden, Lithuania, Estonia, Poland, Latvia, Croatia, Bulgaria and Romania managed to improve their positions. Of course, only the first three countries marked an increase, starting from a high point. The rest just increased slightly their very low marks. In all the rest 18 EU member states AIC per capita expressed – as a percentage of the EU28 average – either stagnated or fell. It’s interesting to note that the ‘programme’ countries, those under the troika’s supervision, suffered the largest losses. In Ireland, the average household lost only 4% of its material standing in this three year period, from 102% to 98%. The worst case was Greece. Another Greek negative lead In this last member states the average household lost 13.3% of its per capita consumption expressed in purchasing power standards. In detail AIC per capita in Greece fell from 98% of the EU28 average in 2010 to 85% in 2012. Of course more losses must have been recorded during this year. The second largest losses were recorded in Portugal. Households there lost 8.5% of their consumption, from 84% to 77%. Spain lost much less, from 94% in 2010 to 92% in 2012. The same is true for Cyprus (to 97% from 100%). In general, the levels of AIC per capita appear more homogeneous than measurements of GDP. Still, the differences are large between member states. As noted above, in 2012, AIC per capita expressed in purchasing power standards varied between nearly 40% above the EU28 average in Luxembourg and around 50% below it in Bulgaria and Romania. As for the ‘programme’ countries, Greece and Portugal paid the highest price.