Europe, Globe, United Kingdom

The deep inequalities of Europe

The difference in purchasing power between West London’s wealthy and the economically depressed region of Extremadura, in Spain, has grown by 41% over the last 10 years.

 

Mario Muñoz Lozano

 

According to a report by the European Statistical Office (Eurostat), the gap between the Gross Domestic Product (GDP) in 2017 of individuals living in West London, described as the wealthiest in Europe, and Extremadura, considered the poorest in Spain, was 168,700 euros.

The figures reported by this office in its latest regional annual record show how the economic crisis, with its wounds still open, has reinforced regional inequalities within the EU. Another more recent Eurostat study highlights that in the 28 member states of the European Union (EU), 113 million people live in households at risk of poverty or social exclusion.

This figure implies that 22% of the population live on incomes below 60% the national average – which means they cannot meet unforeseen expenses or allow themselves a week’s holiday away – or have had little in the way of work.

The EU has undoubtedly survived major crises in recent years. It survived the recession of 2008, the wave of refugees in 2015 and, indeed, everything seems to indicate that it will be able to avoid the rough waters created in the wake of the exit of one of its most solvent members, the United Kingdom.

The pillars of the European project have stood firm in the face of major impacts. However, cracks risk forming in the face of a silent enemy: inequality.

And the resulting impact is already evident. In countries where conditions for the working classes have deteriorated most – Greece, Italy and Spain – support for the EU has declined the most.

The social contract, the basis of the supranational framework of the European project, has deteriorated greatly over the last decade. The gap between rich and poor, north and south and urban and rural continues to grow and is becoming the European Executive’s biggest headache.

In many cases, the EU has been the scapegoat for every nation’s domestic problems, generating Euroscepticism which is very effectively used by right-wing currents and enemies of the EU. At a time of economic uncertainty regarding the outlook, marked by the possibility of a fresh recession, the report emphasizes that economic recovery has failed to reduce inequality between members states and different regions within countries.

Eurostat data reflects how wealth is concentrated among the Old World’s larger consortiums and that the large and glamorous cities and their outskirts are the regions that have accumulated the most wealth in recent years.

According to the European Parliamentary Research Services (EPRS), the European Parliament’s thinking tank, the current growth pattern rewards capital and punishes agricultural and post-industrial areas.

The group cites as examples Spain and France, two countries where the gap between their regions and the rest of Europe between 2007 and 2017 has widened the most.

In 2017, West London recorded a GDP per capita in purchasing power parity (PPP) of 188,000 euros, almost six times the European average, a figure that allowed it to establish itself as the richest region in Europe.

A long way behind with 75,900 euros is Luxembourg. And at the other end of the EU spectrum looms the forgotten Bulgarian region of Severozapaden, with the lowest GDP in the Eurozone.

The Centre for European Reform warns that the most productive regions are no longer exclusively those where industry is most prevalent. It insists that the winning formula involves having a good geographical position, close to successful cities or places with a high percentage of young highly educated workers.

After three decades of trying to close the gap between the north and south, the inequalities within the EU are threatening to form an abyss.

According to the independent research centre Bruegel, this process, over the last 15 years, has been especially acute in Greece and Italy, but Spain also lags behind in terms of income per capita growth over that period.

In the opinion of the think-tank, the EU is failing in one of the main objectives of the single currency: the convergence of its member states’ economies. And it has been failing in this practically since its inception.

With the euro zone economies In full slowdown and with the fear that a no-deal Brexit might accelerate this process, Bruegel’s report draws attention to an ‘unsatisfactory convergence’ that might  ‘threaten social cohesion’ within the EU.

The document warned that Eastern European countries have made the most progress regarding this convergence process. Income per capita of countries such as Lithuania, Latvia, Romania, Poland and Bulgaria grew over 4% annually between 2003 and 2017.

At the other extreme are those countries that are falling behind. In this case, the southern European nations. Among the latter is Spain, whose income per capita has increased just 0.65% per year. According to the most recent Eurostat report, in 14 European states the risk of poverty is greater in rural than urban areas.

In eight member states, between 30% and 40% of rural inhabitants are at risk of exclusion  : Greece, Lithuania, Latvia, Croatia, Cyprus, Hungary, Spain and Italy.

It claims that in Eastern Europe in particular the situation is worse, with more than half of the population below that threshold in countries such as Bulgaria and Romania.

In Western Europe, on the other hand, the risk of poverty is usually higher in cities. This is the case in France, the Netherlands, Germany, the United Kingdom, Belgium and Denmark where living in the countryside actually reduces the chances of social exclusion.

Despite being considered mostly rich countries, because of their macroeconomic statistics, they face what many experts define as ‘the urban paradox’: cities that generate great wealth which is however inaccessible to a large section of their inhabitants.

The best example of this is the high cost of housing. And those who live in large cities not only face financial inequalities but must pay more for their goods and to have access to services that are actually nearer. It is the price of living in the centre without looking back, forgetting for a while the other extremes of Europe, the paradise. (PL)

(Translated by Nigel Conibear) – Photos: Pixabay

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