GDP at regional level
Data extracted in March 2020.
Planned article update: September 2021.
In 2018, the highest levels of regional GDP in the EU-27 were in three major hubs of business activity: Île-de-France (the French capital region), Lombardia (northern Italy) and Oberbayern (southern Germany).
There were four regions across the EU where GDP per inhabitant (in PPS) in 2018 was more than twice as high as the EU-27 average: Luxembourg, the Irish regions of Eastern and Midland (the capital region) and Southern, and the Belgian Région de Bruxelles-Capitale/Brussels Hoofdstedelijk Gewest (another capital region).
The European Union (EU’s) regional policy aims to support broader socioeconomic priorities such as the European semester and the European pillar of social rights. Regional accounts are important in this context, in that they are used to determine the extent to which EU Member States should contribute towards the EU’s budget, while also serving as a key element when deciding upon the regional allocation of cohesion policy expenditure. The EU’s regional expenditure has historically been allocated on the basis of gross domestic product (GDP) per capita and gross national income (GNI) per capita. From 2021 onwards, the rules for allocating funding will become simpler and will be tailored to locally-led development strategies that take account of the socioeconomic and environmental situation (for example, youth unemployment, low levels of educational attainment, the reception and integration of migrants, or climate change).
This article starts with information on regional GDP, the principal aggregate for measuring economic output (presented in absolute values and per inhabitant ratios). It is followed by a broad sectoral analysis of gross value added that highlights the principal wealth generating sectors across EU regions. Having analysed GDP using an output approach, the focus of the second section switches to the income of households: it presents data for primary income per inhabitant (from paid work and self-employment, as well as from interest, dividends and rents) and the compensation of employees (per hour worked). The second of these two indicators may be used in conjunction with labour productivity (gross value added per hour worked) to assess patterns of regional competitiveness.
Regional gross domestic product (GDP)
GDP at market prices in the EU-27 was valued at EUR 13.5 trillion in 2018, equivalent to an average of EUR 30 200 per inhabitant. Behind these overall figures there are considerable differences between EU regions in terms of their economic performance. These might be explained, among other factors, by: the availability of natural and human resources; changes brought about by globalisation, such as the relocation and outsourcing of manufacturing and some service activities; the legacy of former economic systems; socioeconomic developments; geographic proximity to markets or remoteness.
The main focus of the EU’s cohesion policy is to help regions converge/catch-up. Many of the less-developed and transition regions in the EU may be characterised by relatively low-growth, low-income (primarily in eastern, southern and Baltic Member States) or by pockets of poverty, social exclusion and/or industrial decline (regions that have been ‘left-behind’); these are the regions that receive the bulk of EU regional funds.
The French capital region of Île-de-France generated 5.4 % of the EU-27’s economic output
There are 240 NUTS level 2 regions across the EU from which a detailed typology for analysing economic activity can be established. Map 1 is based on absolute values of regional GDP in euro terms; note that some of the differences between regions reflect the (often artificial) administrative boundaries that are used to delineate each region.
In 2018, the highest levels of GDP were recorded in major hubs of business activity. The French capital region of Île-de-France had by far the largest economy (EUR 734 billion), and was followed by the northern Italian region of Lombardia (EUR 388 billion) and the southern German region of Oberbayern (EUR 274 billion). There were six more regions in the EU where GDP was in excess of EUR 200 billion, all of which could also be characterised as major hubs of business activity: Düsseldorf, Stuttgart and Darmstadt (in Germany), Comunidad de Madrid and Cataluña (in Spain) and Rhône-Alpes (in France).
The largest circles in Map 1 highlight regions where GDP was at least EUR 100 billion in 2018. There were 33 NUTS level 2 regions in the EU that met this criterion: together, they accounted for 45.3 % of the EU-27’s total economic activity. This is largely a result of these major hubs of economic activity also having much higher levels of regional population, although their economic output is typically boosted by commuters who live in surrounding regions. To give an idea of how concentrated economic activity was in these regions, at the other end of the range the smallest 33 regions (in terms of GDP) together provided a cumulative share of just 1.5 % of the EU-27’s economic output.
Measuring the size of an economy
The central measure of national accounts, GDP, summarises the economic position of a country or a region. This well-known balance has traditionally been divided by the total number of inhabitants to create a proxy measure for analysing overall living standards, namely, GDP per inhabitant.
While GDP continues to be used for monitoring economic developments, playing an important role in economic decision-making, it has been complemented by other indicators as a source of information for informing policy debates on social and environmental aspects of well-being. This is because GDP does not take account of externalities such as environmental sustainability or issues such as income distribution or social inclusion, which are increasingly seen as important drivers for sustainable development and the overall quality of life.
In order to compensate for price level differences across countries, GDP can be converted using conversion factors known as purchasing power parities (PPPs). The use of PPPs, rather than market exchange rates, results in data being denominated in an artificial common currency unit called a purchasing power standard (PPS). The use of PPS series, rather than euro-based series, tends to have a levelling effect, as countries and regions with very high GDP per inhabitant in euro terms also tend to have relatively high price levels (for example, the cost of living in Luxembourg is generally much higher than the cost of living in Bulgaria).
Map 2 presents information for regional GDP per inhabitant in PPS terms; data are shown as an index, relative to the EU-27 average (EU-27 = 100). Those regions considered as relatively ‘rich’ — where GDP per inhabitant was above the EU-27 average — are shown in blue. In 2018, higher than average levels of GDP per inhabitant were primarily found in a band of regions that ran from the Nordic Member States, down through Germany and the Benelux countries into Austria and northern Italy. Otherwise, there were a few isolated pockets of relatively high GDP per inhabitant, for example, most parts of Ireland, specific regions in Spain, as well as many capital regions.
The ‘poorest’ regions in the EU — where GDP per inhabitant was less than 75 % of the EU-27 average — are shown by the darkest shade of purple in Map 2; a large proportion of the EU’s cohesion policy funding is directed at these ‘less developed regions’. They were primarily located in a band running from Latvia in the north, down through eastern parts of the EU into Greece and southern Italy, before extending across the Mediterranean Sea to southern regions of Spain and most of Portugal.
Germany and Italy were characterised by a polycentric pattern of economic development
There is often a stark contrast between the economic performance of capital regions and their surrounding regions. In 2018, this pattern was most apparent in eastern EU Member States: for example, Praha (Czechia) and Bratislavský kraj (Slovakia) both featured among the 10 regions in the EU with the highest levels of GDP per inhabitant, while their surrounding regions had levels of economic activity that were below the EU-27 average. A similar, although less pronounced, pattern could be observed in Warszawski stołeczny (Poland), Bucureşti-Ilfov (Romania), Budapest (Hungary), Sostinės regionas (Lithuania) and Área Metropolitana de Lisboa (Portugal).
Regional GDP per inhabitant was generally highest in capital regions, which often act as hubs of business (and cultural) activity. Many of the EU Member States were characterised by this monocentric pattern of economic development, with the only exceptions (among Member States composed of more than one NUTS level 2 region) being: Germany (where the highest level of GDP per inhabitant was recorded in Hamburg), Ireland (Southern), Italy (Provincia Autonoma di Bolzano/Bozen) and Austria (Salzburg). The situation in Germany and Italy was atypical insofar as they were both characterised by a more polycentric pattern of economic development. Indeed, GDP per inhabitant in the German capital city region of Berlin was lower than in 13 of the 37 other German regions, while a similar analysis for Italy reveals that GDP per inhabitant in Lazio was lower than in 5 of the 20 other Italian regions.
GDP per inhabitant in Luxembourg was almost nine times as high as in Mayotte
Luxembourg had the highest level of regional GDP per inhabitant in 2018; its level of economic output was 2.6 times as high as the EU-27 average. There were three other NUTS level 2 regions in the EU where economic output per capita was at least twice as high as the EU-27 average: two of these regions were in Ireland — Eastern and Midland (the capital region) and Southern — while the third was Région de Bruxelles-Capitale/Brussels Hoofdstedelijk Gewest (the Belgian capital region).
The lowest levels of regional GDP per inhabitant in 2018 were recorded in Mayotte (one of the régions ultrapériphériques in France), Severozapaden and Severen tsentralen (both in Bulgaria). GDP per inhabitant in Luxembourg was almost nine times as high as it was in Mayotte.
Value added specialisation
There are a wide variety of reasons that explain the distribution and concentration of economic activities across EU regions. Natural resource endowments may reveal why some regions are particularly specialised in activities such as mining or forest-based activities. In a similar vein, the weather, location and landscape can help shed light on why others might be specialised in agriculture or tourism-related activities. A critical mass of clients (either other enterprises or households/consumers) or the supply of skilled labour may also explain specialisations: for example, research parks tend to develop near to universities, whereas financial, communications and media services are often concentrated in capital regions.
Figure 1 shows the 10 NUTS level 2 regions in the EU with the highest shares of activity across six main economic activities. Note that the figure does not indicate those regions with the highest overall levels of value added in a particular activity, rather it shows relative shares of total value added within each region.
More than half of the value added generated in Southern (Ireland) was attributed to industrial activities …
In 2017, there were eight regions in the EU where the primary activities of agriculture, forestry and fishing accounted for a double-digit share of total value added. The highest value was recorded in the Greek region of Thessalia (12.2 %). The relative importance of these activities was particularly pronounced in eastern and southern parts of the EU: 12 regions reported value added shares for agriculture, forestry and fishing that were at least five times as high as the EU-27 average (1.9 %).
Southern (Ireland) was the only region in the EU where industry accounted for more than half (59.8 %) of total value added in 2017. This region’s industrial economy is characterised by a high number of multinational enterprises in areas such as biotechnology, electronics, information technology and pharmaceuticals. The 10 regions in the EU that were most relatively specialised in industrial activities included three regions from each of Czechia and Hungary. This may be linked, at least in part, to their integration within international supply chains (such as the manufacture of motor vehicles), benefitting from close geographic proximity (to western neighbours) and relatively low labour costs.
… while trade, transport, accommodation and food, and information and communication services accounted for more than 50 % of regional value added in the popular holiday destination of Notio Aigaio
In 2017, more than half (50.4 %) of the total value added generated in the Greek island region of Notio Aigaio was derived from trade, transport, accommodation and food, and information and communication services. Notio Aigaio was joined by five other popular holiday destinations — Ionia Nisia, Kriti (both also in Greece), Illes Balears, Canarias (both in Spain) and Algarve (in Portugal) — among the 10 regions with the highest shares of their regional economic activity in trade, transport, accommodation and food, information and communication services.
Almost half (46.9 %) of the total value added that was generated in Luxembourg came from financial and insurance services, real estate, professional, scientific and technical activities. The 10 regions with the highest shares of regional value added concentrated in these activities were characterised as major financial centres and/or hubs of business activity. They included six capital regions, where it is relatively common to find a high concentration of business headquarters that rely on a broad range of financial and business services (for example, management and tax consultancies, legal activities, advertising or market research).
The information presented above has already highlighted that wealth creation is concentrated in capital and metropolitan regions across the EU. However, it is likely that part of the income created in these hubs of business activity may be attributed to commuters who live in surrounding regions (where the price of property and cost of living may be lower). As a result, GDP per inhabitant in capital and metropolitan regions tends to be relatively high (compared with income measures), whereas surrounding regions are often characterised by relatively high levels of income per inhabitant (when contrasted against their economic output).
Primary income per inhabitant
Primary income covers income from paid work and self-employment, as well as from interest, dividends and rents. In 2017, EU-27 primary income per inhabitant averaged 18 800 PPS; the use of data in PPS based on consumption (rather than in euro terms) takes account of price level differences between countries and that household expenditure mainly relates to consumption.
Oberbayern had the highest level of primary income per inhabitant
There were 31 regions spread across eight different EU Member States where income per inhabitant was at least 25 000 PPS; these are shown by the darkest shade of purple in Map 3. A majority (21 regions) of these were located in Germany, with the highest income levels predominantly found in western (rather than eastern) regions.
At the other end of the range, there were 23 regions (also spread across eight different EU Member States) where primary income per inhabitant was less than 10 000 PPS in 2017; these regions are shown by the lightest shade of purple in Map 3. These were concentrated in south-eastern Europe, including: all but one of the six regions that compose Bulgaria (the exception being the capital region of Yugozapaden), all but two of the eight regions that compose Romania (the exceptions being the capital region of Bucureşti-Ilfov and Vest), and 6 out of the 13 regions that make up Greece.
In 2017, primary income ranged from a high of 34 800 PPS per inhabitant in Oberbayern (Germany) down to 4 800 PPS in Severozapaden (Bulgaria). As such, the average level of income in Oberbayern was more than seven times as high as the level recorded in Severozapaden. Three more German regions featured at the top of the ranking with the highest levels of income per inhabitant — Stuttgart, Darmstadt and Hamburg — and they were followed by Luxembourg. Note that Luxembourg had the highest level of income in euro terms (EUR 37 900 per inhabitant), although its relatively high cost of living meant that it ranked fifth when analysing the data in PPS terms.
Compensation of employees
One of the principal areas of interest/concern for many employees is their level of remuneration. Employee compensation is defined (within national accounts) as remuneration, in cash or in kind (such as a company car or vouchers for meals), payable by an employer to an employee in return for work done; it also includes payments linked to employers’ social contributions (such as health or pension contributions). The figures presented below refer to gross (in other words, before tax) hourly compensation in euro terms.
The highest level of employee compensation was recorded in the Belgian capital region
In 2017, employees working in the EU-27 received an average of EUR 22.7 in gross compensation for each hour that they worked. The highest level of employee compensation was recorded in the Belgian Région de Bruxelles-Capitale/Brussels Hoofdstedelijk Gewest (EUR 45.6 per hour), while the lowest was in the Bulgarian region of Severen tsentralen (EUR 4.1 per hour). As such, the ratio between the highest and lowest levels of employee compensation was 11 : 1.
Capital regions often recorded the highest levels of employee compensation — which is perhaps unsurprising given the relatively high cost of living in these regions and the fact that they are often the location for company and public sector headquarters. This pattern was repeated in a majority of multi-regional EU Member States in 2017: Figure 2 shows that the only exceptions were Oberbayern (that had the highest level of compensation per hour worked in Germany), Dytiki Makedonia (Greece), País Vasco (Spain), Jadranska Hrvatska (Croatia) and Provincia Autonoma di Bolzano/Bozen (Italy).
There were six NUTS level 2 regions in the EU where the level of employee compensation was above EUR 40.0 per hour. Aside from the Belgian capital region, they were: Luxembourg (EUR 45.4 per hour); the Danish capital region of Hovedstaden (EUR 43.0); two other Belgian regions that surround the capital region, Prov. Vlaams-Brabant and Prov. Brabant Wallon (EUR 42.4 and EUR 41.7); and the French capital region of Île-de-France (EUR 41.1).
Regional labour productivity
Labour productivity may be defined as gross value added divided by a measure of labour input, typically either the number of persons employed or the number of hours worked. When based on a simple headcount of labour input, changes observed for this indicator can, at least to some degree, reflect changes in the structure of the employment market. For instance, the ratio falls when there is a shift from full-time to part-time work. As such, labour productivity ratios that are based on the total number of hours worked are normally preferred as a more informative measure. High regional levels of labour productivity may be linked to the efficient use of labour and/or reflect the skills and experience of the labour force. These in turn may result from the specific mix of activities present in each regional economy, as some activities — for example, knowledge-intensive industrial activities, business or financial services — tend to be characterised by higher levels of labour productivity.
In 2017, an average of EUR 35.1 of value was added for each hour worked in the EU-27. This figure can be used as the basis for deriving a set of labour productivity indices, which are presented relative to the EU-27 average = 100 (see Map 4). There were three NUTS level 2 regions where labour productivity was more than twice as high as the EU-27 average in 2017: two of these were situated in Ireland — Southern (which had the highest level at EUR 86.8 per hour worked) and the capital region of Eastern and Midland (EUR 76.6) — while the third was Luxembourg (EUR 79.2). The next highest levels of labour productivity — within the range of EUR 64.0-68.0 per hour worked — were recorded in the capital regions of Belgium, Denmark, Sweden and France.
At the other end of the range, there were 15 NUTS level 2 regions in the EU where labour productivity was less than EUR 10.0 per hour worked in 2017, all located in Bulgaria, Romania or Poland. The lowest levels of labour productivity — under EUR 6.0 per hour worked — were recorded in Yuzhen tsentralen and Severen tsentralen (both of which are in Bulgaria).
As for employee compensation, it was relatively common to find the highest levels of labour productivity in capital regions. The only exceptions (among the multi-regional EU Member States) were: Oberbayern (Germany), Southern (Ireland), País Vasco (Spain), Jadranska Hrvatska (Croatia), Provincia Autonoma di Bolzano/Bozen (Italy) and Vorarlberg (Austria). Note that four of these —Oberbayern, País Vasco, Jadranska Hrvatska and Provincia Autonoma di Bolzano/Bozen — recorded both the highest ratios for labour productivity and employee compensation within their Member States.
Source data for figures and maps
The European system of national and regional accounts (ESA 2010) is the latest internationally compatible accounting framework for a systematic and detailed description of the EU economy. ESA 2010 has been implemented since September 2014 and is consistent with worldwide guidelines on national accounting, as set out in the system of national accounts (2008 SNA).
ESA 2010 ensures that economic statistics for EU Member States are compiled in a consistent, comparable, reliable and up-to-date way. The legal basis for these statistics is a Regulation of the European Parliament and of the Council on the European system of national and regional accounts in the European Union (Regulation (EU) No 549/2013). ESA 2010 is not restricted to annual national accounting, as it also applies to quarterly and shorter or longer period accounts, as well as to regional accounts. It is harmonised with the concepts and classifications used in many other social and economic statistics (for example, statistics on employment, business or international trade) and as such serves as a central reference for socioeconomic statistics.
Statistics from regional economic accounts are largely shown for NUTS level 2 regions. The data for statistical regions in the EFTA and candidate countries are often unavailable and have been replaced (where appropriate) by national aggregates. Note also that the data for these countries are sometimes less fresh than for EU regions; all discrepancies are footnoted under maps or figures.
In August 2009, the European Commission adopted a communication GDP and beyond: measuring progress in a changing world (COM(2009) 433 final), which outlined a range of actions to improve and complement GDP measures. This noted that there was a clear case for complementing GDP with statistics covering other economic, social and environmental issues on which individuals’ well-being critically depends. A set of complementary indicators was detailed in a staff working paper Progress on GDP and beyond actions (SWD(2013) 303 final), including regional and local indicators.
International interest in sustainable development issues has been led by work conducted under the auspices of the United Nations (UN). Transforming our world: the 2030 agenda for sustainable development was adopted on 25 September 2015 and provides a commitment to eradicate poverty and achieve worldwide sustainable development by 2030. In conjunction, the European Commission adopted a series of Communications including A decent life for all: ending poverty and giving the world a sustainable future (COM(2013) 92 final), A decent life for all: from vision to collective action (COM(2014) 335 final) and A global partnership for poverty eradication and sustainable development after 2015 (COM(2015) 44 final).
Following on from the global financial and economic crisis of 2008, the European Commission subsequently reset its priorities in 2014 as ‘boosting jobs, growth and investment’. This major initiative aimed to unlock public and private investment by targeting infrastructure developments, such as broadband internet, energy networks and transport. In its Communication An investment plan for Europe (COM(2014) 903 final), the European Commission underlined the role that EU Member States and regional authorities should play to get the maximum impact from structural funds by capitalising on a variety of financial instruments in the form of loans, equity and guarantees. In January 2015, the European Commission adopted a Communication on making the best use of the flexibility within the existing rules of the stability and growth pact (COM(2015) 12 final); it aimed to strengthen the link between investment, structural reforms and fiscal responsibility. This was followed in 2016 by two further Communications following a stock-taking exercise to analyse the progress made during the first two years of the investment plan: Europe investing again — taking stock of the investment plan for Europe (COM(2016) 359 final) and Strengthening European investments for jobs and growth: towards a second phase of the European Fund for strategic investments and a new European external investment plan (COM(2016) 581 final).
In May 2018, the European Commission presented a proposal for its multiannual financial framework covering the period 2021-2027. At the time of writing, negotiations were still on-going and may be expected to conclude during 2020. It is likely that the EU’s regional and cohesion policy will, in the coming years, support broader socioeconomic priorities by focusing on five investment priorities:
- a smarter Europe (for example, through innovation and digitisation);
- a greener, carbon free Europe (investing in energy transition, renewables and the fight against climate change);
- a more connected Europe (highlighting strategic transport and digital networks);
- a more social Europe (supporting quality employment, education, skills, social inclusion and equal access to healthcare);
- a Europe closer to its citizens (promoting locally-led development strategies and sustainable urban development).
In her political guidelines for the European Commission for 2019-2024, President van der Leyen highlighted a desire to strive for a European economy that works for people, based on social fairness and prosperity. To do so she called, among other actions, for a deepening of economic and monetary union, greater support for small and medium-sized enterprises (SMEs), the full implementation of the European pillar of social rights, and fairer taxation.
- Building the system of national accounts — online publication
- European sector accounts — background (background article)
- European system of national and regional accounts — ESA 2010 (background article)
- GDP per capita, consumption per capita and price level indices
- National accounts and GDP
- Regional economic accounts - ESA 2010 (t_reg_eco)
- Regional economic accounts - ESA2010 (t_nama_10reg)
- Regional economic accounts (reg_eco10)
- Gross domestic product indicators (reg_eco10gdp)
- Branch and household accounts (reg_eco10brch)
- Main GDP aggregates (nama_10_ma)
- Auxiliary indicators (population, GDP per capita and productivity) (nama_10_aux)
- Basic breakdowns of main GDP aggregates and employment (by industry and by assets) (nama_10_bbr)
- Regional economic accounts (nama_10reg)
- Gross domestic product indicators (nama_10r_gdp)
- Branch and household accounts (nama_10r_brch)
Manuals and further methodological information
- ESA 2010 — manuals and guidelines
- Manual on regional accounts methods — 2013 edition
- Methodological manual on territorial typologies — Eurostat — 2018 edition
- Regional economic accounts (ESMS metadata file — reg_eco10_esms)