Private final consumption expenditure per head of population relative to the EU
(EU=100) – (2004, 2008, 2017)
Figure 1.6 shows the evolution of private final consumption expenditure per head of population relative to the EU average level in three different years (2004, 2008 and 2017). Private final consumption refers to the expenditure of households and non-profit institutions on goods and services and excludes benefits in kind financed by the government and supplied to households. Insofar as private final consumption depends largely on disposable incomes, its comparison with the evolution of GDP per head provides an (imperfect) indication of how much of the produced output has been used by domestic households (as opposed, for example, to foreign capital owners operating multinational companies in a country) to improve their current living standards. That the value for private final consumption expenditure per head of population in the EU is equal to 100 for all three years examined in the figure does not mean that its level was the same in all three years. In fact, it was higher in 2008 than it was in 2004, and higher again in 2017.
In Figure 1.6, the distribution of Member States to the right and left of the EU base (100) broadly follows a division between older Member States and their newer and poorer counterparts, although the composition of total consumption and its distribution between private and government final consumption also matters for the ranking of countries presented in the figure. Government final consumption includes social transfers in kind that the government finances and which are offered as goods and services to households. Thus, rich Member States such as Sweden and Finland appear to have a private final consumption per head roughly equal to or somewhat lower than the EU average because private final consumption in Sweden and Finland accounts for about two thirds of total consumption, while in the EU it accounts for about three quarters of total consumption.
We also see that in the majority of new Member States, except for Malta, Slovenia and recently Croatia, private final consumption expenditure per head of population was higher relative to the EU average in 2008 than in 2004 and higher again in 2017. In this respect, we can identify some convergence with the older Member States, although some part of this is due not only to the new Member States growing faster but also to growth slowing down in the older Member States due to the crisis.