Statistics Explained

National accounts and GDP

This is the stable Version.

Revision as of 17:02, 24 May 2022 by Rosswen (talk | contribs)


Data extracted in June 2021.

Planned article update: 29 June 2022.

Highlights

After six consecutive annual increases, GDP in the EU decreased in 2020, down 6.1 %.

Lower value added shares in 2020 (than 2005) in the EU for 1) agriculture, forestry, fishing 2) construction 3) industry 4) distributive trades, transport, accommodation and food services 5) arts, entertainment, recreation, other services 6) financial and insurance activities.

Higher value added shares in 2020 (than 2005) in the EU for 1) information and communication 2) professional, scientific, technical, admin. and support services 3) real estate activities 4) public admin., defence, education, human health and social work activities.

After six consecutive annual increases, in 2020 the EU economy recorded its first fall in investment.

[[File:National accounts and GDP-interactive_NA2021.xlsx]]

Real GDP growth, 2005-2020

National accounts are the source for a multitude of well-known economic indicators which are presented in this article. Gross domestic product (GDP) is the most frequently used measure for the overall size of an economy, while derived indicators such as GDP per inhabitant (per capita) — for example, in euro or adjusted for differences in price levels (as expressed in purchasing power standards, PPS) — are widely used for a comparison of living standards, or to monitor economic convergence or divergence within the European Union (EU).

Moreover, the development of specific GDP components and related indicators, such as those for economic output, imports and exports, domestic (private and public) consumption or investments, as well as data on the distribution of income and savings, can give valuable insights into the main drivers of economic activity and thus be the basis for the design, monitoring and evaluation of specific EU policies.

This article is published every year with annual data. This 2021 edition describes the situation up to the year 2020. As a consequence, first findings relating to the early stages of the COVID-19 crisis are available. The full scale of the pandemic and its associated containment measures will only be revealed in later editions. While the COVID-19 crisis has had an impact on the economy as a whole, the impact has differed from one sector to another and has had a varied impact on different types of expenditure (such as consumption and investment). As such, comparisons of data for 2020 with much earlier years (such as 2005, as presented in this article) combine at least two influences: structural change over several years up to 2020 as well as the specific impact of COVID-19 between 2019 and 2020. This should be borne in mind when analysing time series.

Full article

Developments for GDP in the EU: decline in 2020, the first since 2013

The global financial and economic crisis resulted in a severe recession in the EU in 2009 (see Figure 1), followed by a recovery in 2010. The crisis started earlier in Japan, the United Kingdom and the United States, with negative annual rates of change for GDP (in real terms) already recorded in 2008, deepening in 2009, before rebounding in 2010. By contrast, economic output in China (including Hong Kong) continued to grow at a rapid pace during the crisis (close to 10 % each year), slowing somewhat in subsequent years, but remaining considerably higher than in any of the other economies shown in Figure 1.

The crisis was already apparent in the EU in 2008 when there had been a considerable lower rate of increase for GDP than in 2007 (down from 3.1 % in 2007 to 0.6 % in 2008) and this was followed by a 4.3 % decrease in GDP in 2009. The recovery in the EU saw the index of GDP (based on chain linked volumes) increase by 2.2 % in 2010 and there was a further gain of 1.8 % in 2011. The recovery was not sustained, and subsequently GDP contracted 0.7 % in 2012 and the change in 2013 was negligible. A series of positive rates of change was recorded thereafter, with growth relatively stable between 1.6 % and 2.8 % each year from 2014 to 2019. In 2020, the EU recorded a real decrease in GDP of 6.1 % as the initial impact of the COVID-19 crisis was felt; this was considerably larger than the decrease in activity in 2009 during the global financial and economic crisis.

In the euro area, the corresponding rates of change were similar to those recorded in the EU: the contractions recorded in 2009, 2012 and 2020 were stronger (down by 4.5 %, 0.9 % and 6.5 %) than in the EU and the 2012 contraction was sustained into 2013 (down 0.2 %) whereas there was no change in the level of GDP across the EU in 2013. While there was growth in the euro area each year that there was growth in the EU, the rate of growth in the euro area was consistently 0.1 to 0.3 percentage points lower. As such, during the period 2005-2020, real GDP growth in the euro area (up 9.2 % overall) was somewhat weaker than that in the EU as a whole (12.6 %).

Figure 1: Real GDP rate of change, 2005-2020
(% change compared with the previous year)
Source: Eurostat (naida_10_gdp) and (nama_10_gdp)

Within the EU, real GDP growth varied considerably, both over time and between EU Member States (see Table 1). After a contraction in 2009 in all of the EU Member States except for Poland, economic growth returned thereafter in most of the Member States: 23 recorded growth in 2010 and (a different) 23 recorded growth in 2011. However, in 2012 this development changed, as just over half (14) of the Member States reported economic expansion, while there was falling output in the remaining (13) Member States. Thereafter, a larger majority of Member States once again recorded growth, with the number of countries recording a positive rate of change reaching 16 in 2013 and rising to 23 in 2014 and 26 in 2015 and 2016. All 27 Member States recorded a positive rate of change in 2017 (the first time this had occurred since 2007) and did so again in 2018 and 2019.

Table 1: Real GDP rate of change, 2005-2020
Source: Eurostat (naida_10_gdp) and (nama_10_gdp)

The situation reversed strongly in 2020, as Ireland was the only EU Member State to record GDP growth. The negative rates of change elsewhere ranged down to -7.6 % in Portugal, -7.8 % in Malta, -7.9 % in France, -8.0 % in Croatia, -8.2 % in Greece, -8.9 % in Italy and -10.8 % in Spain.

Average annual GDP growth of 0.8 % over the last 15 years in the EU and 0.6 % in the euro area

Until 2020, Poland had consistently recorded positive rates of change throughout the period shown in Table 1, as had Kosovo* (data from 2010 to 2018) among the non-member countries shown. The positive rate of change in 2020 in Ireland was the 11th consecutive positive rate, as it also was for Turkey. The negative rate of change in 2020 was the first since 2009 in Belgium, Bulgaria, Denmark, Germany, Estonia, France, Lithuania, Malta, Austria and Slovakia; this was also the case in Norway, Switzerland and the United States. Note that data for 2020 are not yet available for several non-member countries, among which China, which had positive rates of change for all years from 2005 to 2019, and the United Kingdom, which had not recorded a negative rate of change since 2009.

The effects of the global financial and economic crisis lowered the overall performance of the EU Member State economies when analysing developments over the last 15 years, and the COVID-19 crisis lowered it further still. The annual average growth rates of the EU and the euro area between 2005 and 2020 were 0.8 % and 0.6 %, respectively (see Table 1). By comparison, between 2009 (the low point of the global and financial crisis) and 2019 (the last full year before the COVID-19 crisis) the average for the EU was 1.6 % and for the euro area it was 1.4 %.

The highest growth among the EU Member States, by this measure, was recorded for Ireland (average annual growth of 4.2 % between 2005 and 2020; this includes an exceptional increase in 2015 reflecting the activities of multinational enterprises). Malta (3.8 %) and Poland (3.6 %) had the next highest average growth rates. By contrast, the real development of GDP between 2005 and 2020 was negative in Italy and Greece, down on average by 0.7 % and 1.8 % per year, respectively.

Cross-country comparisons are often made using purchasing power standards (PPS) which are values adjusted to account for differences in price levels between countries. Note the data shown in Figures 2 and 3 and in Table 2 are in current prices and should not be used for calculating rates of change because of inflation and exchange rate fluctuations.

In 2020, GDP in the EU was PPS 13.3 trillion (PPS 13 300 billion) — note that for the EU one PPS equals one euro. As such, the EU’s GDP in PPS returned below that of the United States, as it had been every year of the period from 2005 to 2020 except for 2019 — see Figure 2. Note that PPS figures are intended for cross-country comparisons rather than for temporal comparisons since they cannot be considered as time series for methodological reasons. It is interesting to note that China historically had a lower level of economic output than either the EU or the United States, but that this situation changed with the rapid transformation and continued expansion of the Chinese economy. China’s GDP in PPS reached a level in 2013 that was — for the first time — higher than that recorded for the EU. In 2016, China’s GDP in PPS drew almost level with that recorded in the United States and in 2017 it surpassed the United States’ level (a situation that continued thereafter).

Figure 2: GDP at current market prices, 2005-2020
(billion PPS)
Source: Eurostat (prc_ppp_ind)

In 2020, Germany accounted for more than one fifth of the EU’s GDP in PPS terms

The euro area accounted for 80.5 % of the EU’s GDP in 2020 (when measured in PPS terms), down from 84.8 % in 2005. In 2020, the sum of the four largest EU Member State economies (Germany, France, Italy and Spain) accounted for just under three fifths (59.7 %) of the EU’s GDP (in PPS terms), which was 4.6 percentage points lower than their share 15 years earlier (in 2005). Germany alone accounted for 22.4 % of the EU’s GDP in 2020, down marginally from 22.5 % in 2005. The shares of the other three largest Member States fell more strongly between 2005 and 2020, down 2.5 percentage points in Italy, 1.2 percentage points in Spain and 0.9 percentage points in France.

In 2020, GDP per inhabitant averaged EUR 29 700 across the EU

To evaluate standards of living, it is commonplace to use GDP per inhabitant, in other words, adjusted for the size of an economy in terms of its population: the population of the EU in 2020 was 447 million. In 2020, average GDP per inhabitant for the EU (in current prices) was EUR 29.7 thousand. Values expressed in PPS have been adjusted for differences in price levels across countries. The relative position of individual countries can be expressed through a comparison with the EU average, with this set to equal 100 (see the right-hand side of Table 2). Based on this measure, the highest value among the EU Member States was recorded for Luxembourg, where GDP per inhabitant in PPS was about 2.7 times as high as the EU average in 2020 (which is partly explained by the importance of cross-border workers from Belgium, France and Germany). By contrast, GDP per inhabitant in PPS was just over half the EU average in Bulgaria.

Table 2: GDP at current market prices, 2005-2020
Source: Eurostat (prc_ppp_ind)

A comparison of the PPS figures relative to the EU for 2005 and 2020 suggests that some convergence in living standards took place. Most Member States that joined the EU in 2004, 2007 or 2013 moved from a position some way below the EU average in 2005 to one closer to the EU average in 2020, despite some setbacks during the global financial and economic crisis — see Figure 3. Cyprus was the main exception, as it moved from above the EU average (103 % of the EU average in 2005) to a position below it (87 % in 2020); Slovenia was also an exception, in that it was 11 % below the EU average in 2005 and also in 2020. Among the other Member States, Italy and Spain also moved from a position above the EU average to one below it. Greece and Portugal moved further below the EU average. Denmark, Germany and Luxembourg moved further ahead of the EU average, as most notably did Ireland. The remaining EU-15 Member States — Sweden, Finland, Austria, Belgium, the Netherlands and most notably France — moved downwards from a position above the EU average in 2005 to one closer to (but still above) the EU average in 2020.

Figure 3: GDP per capita at current market prices, 2005 and 2020
(EU = 100; based on PPS per inhabitant)
Source: Eurostat (prc_ppp_ind)

Gross value added in the EU by economic activity

Close to three quarters of the EU’s total value added in 2020 was generated within the services sector

Looking at GDP from the output side, Table 3 gives an overview of the relative importance of 10 economic activities (as defined by NACE Rev. 2) in terms of their contribution to total gross value added at current basic prices.

Industry’s share of EU value added was 1.7 percentage points lower in 2020 (19.3 %) than it had been in 2005 (21.0 %), while the contribution of distributive trades, transport, accommodation and food services fell from 19.4 % to 17.8 %. These activities moved from largest and second largest among the 10 activities shown to second and third largest, as the share of public administration, defence, education, human health and social work activities increased from 18.3 % to 19.8 %; this increase of 1.5 percentage points was the largest recorded among the 10 activities shown. Real estate activities as well as professional, scientific, technical, administrative and support services (hereafter referred to as business services) both increased their shares of EU total value added by 1.2 percentage points and remained the fourth and fifth largest activities with 11.4 % and 11.1 % shares, respectively. The only other activity to record an increased share was information and communication activities, up 0.7 percentage points to 5.4 %, moving ahead of financial and insurance activities.

The other activities that recorded falls in their share of output in the EU were agriculture, forestry and fishing (down 0.1 percentage points to 1.9 %), construction (down 0.3 percentage points to 5.7 %), financial and insurance activities (down 0.5 percentage points to 4.6 %) and arts, entertainment and recreation, other services and activities of household and extra-territorial organisations and bodies (down 0.4 percentage points to 3.0 %).

Table 3: Gross value added at current basic prices, 2005 and 2020
(% share of total gross value added)
Source: Eurostat (nama_10_a10)

Services contributed 73.1 % of the EU’s total gross value added in 2020 compared with 71.0 % in 2005. The relative importance of services was particularly high in Luxembourg, Malta, Cyprus, France, Greece, the Netherlands, Belgium and Portugal, where they accounted for at least three quarters of total value added. By contrast, the share of services was between 63 % and 67 % in Romania Hungary, Poland, Slovenia and Czechia, and was as low as 57.6 % in Ireland; all of these EU Member States recorded relatively high shares for industry, particularly Ireland.

Diverging developments of economic activities over the last decade

Structural change is, at least in part, a result of phenomena such as technological change, developments in relative prices, outsourcing and globalisation, often resulting in manufacturing activities and some services (those that can be provided remotely, such as online or through call centres) being moved to lower labour-cost regions, both within and outside the EU. Furthermore, several activities were particularly affected by the global financial and economic crisis and its aftermath and/or by the COVID-19 crisis.

Between 2005 and 2009, output from agriculture, forestry and fishing in the EU increased by 7.6 %. Thereafter its development fluctuated for three years (rates of change between -4.7 % and 2.7 %) before increasing in 2013 and 2014. The most recent six years have again shown fluctuating developments, but with little volatility, with rates of change between -1.2 % and 1.2 %. Overall, output was 10.5 % higher in 2020 than it had been in 2005. EU industrial output increased prior to the global financial and economic crisis, but fell 1.4 % in 2008 and 11.8 % in 2009. After a strong rebound in 2010 and 2011 (up 11.8 % overall), industrial output fell by 2.3 % between 2011 and 2013. Thereafter, industrial output increased consistently, with growth recorded for five consecutive years. Already in 2019 industrial output fell — down 0.4 % — and this was followed by a decline of 7.0 % in 2020, as the COVID-19 pandemic and its related restrictions had an impact. Overall, EU industrial output was 9.2 % higher in 2020 than in 2005.

Construction recorded the deepest and longest contraction following the global financial and economic crisis, with its output falling by 20.9 % across the EU between 2007 and 2014, with output falling every year during this period. As such, the 1.7 % increase recorded for construction in 2015 was the first annual growth rate in eight years and was followed by growth between 1.1 % and 2.8 % through to 2019. In 2020, construction output fell for the first time since 2014, down 4.5 %. Despite the period of sustained growth between 2015 and 2019, construction output in 2020 was 10.8 % lower than it had been in 2005.

Information and communication activities in the EU recorded growth nearly every year between 2005 and 2020, the only exception was a fall of 0.6 % in 2009. However, information and communication was unique, in that it was the only one of the 10 activities shown in Figures 4 and 5 that recorded growth in 2020, expanding by 0.8 %. Two service activities — real estate activities; public administration, defence, education, human health and social work activities — did not post any negative rates of change between 2005 and 2019, but did record a fall in output in 2020. Slightly more interrupted growth was observed for two more service activities — distributive trades, transport, accommodation and food services as well as business services: both recorded falls in two years between 2005 and 2019, as well as a fall in 2020. Among these five service activities, the fastest overall growth between 2005 and 2020 was for information and communications, as output in 2020 was 86.1 % higher than in 2005. The slowest growth was for distributive trades, transport, accommodation and food services (up 7.6 % overall), reflecting its 12.2 % fall in 2020 compared with 2019, as the containment measures associated with the COVID-19 pandemic heavily impacted some parts of this activity.

The two remaining service activities — financial and insurance activities as well as arts, entertainment and other services — each recorded three or four years of falling output across the EU between 2005 and 2019, as well as falls in 2020. Overall growth was relatively modest for financial and insurance activities (up 13.8 % overall). By contrast, output for arts, entertainment and other services was 8.5 % lower in 2020 than in 2005, having been 11.9 % higher in 2019 than in 2005; this large swing between 2019 and 2020, when output fell by 18.2 %, reflects the major impact of the COVID-19 crisis on arts, entertainment and other services.

Figure 4: Developments for real gross value added, EU, 2005-2020
(2005 = 100)
Source: Eurostat (nama_10_a10)


Figure 5: Developments for real gross value added, EU, 2005-2020
(2005 = 100)
Source: Eurostat (nama_10_a10)

Labour productivity

To eliminate the effects of inflation, labour productivity per person employed can be calculated using data adjusted for price changes. An analysis of labour productivity per person employed in real terms (based on chain linked volumes) over the 15-year period from 2005 to 2020 shows increases in the EU for half of the 10 economic activities covered. In relative terms, the largest productivity gains were recorded for agriculture, forestry and fishing (up 53.8 %) and for information and communication activities (up 38.0 %). Smaller increases were observed for industry, for financial and insurance activities, and for real estate activities — see Figure 6. Note that a precise comparison of labour productivity levels in real terms between activities can only be analysed for reference year 2005 due to the non-additivity of chain linked volumes.

Figure 6: Real labour productivity, EU, 2005, 2010, 2015 and 2020
(thousand EUR per person employed)
Source: Eurostat (nama_10_a10) and (nama_10_a10e)

Further data on the development of real labour productivity measured either per person employed or per hour worked are shown in Table 4. Labour productivity per person employed increased, in real terms, between 2005 and 2020 in most EU Member States, with Luxembourg, Italy and Greece recording falls. In a similar manner, over the same period labour productivity per hour worked also increased in nearly all EU Member States, Greece again being an exception. Note that there is a break in series for Greece for both indicators. Leaving aside the Member States with a break in series (Ireland, Greece and Poland; see Table 4), the largest percentage increases for both of these real labour productivity measures were recorded in Romania and Lithuania, while the next highest rates (in different orders) were recorded in Bulgaria, Czechia, Estonia, Latvia and Slovakia. Aside from Greece, the smallest increases / largest decreases for both indicators were recorded in Luxembourg and Italy.

Table 4: Real labour productivity, 2005, 2010, 2015 and 2020
Source: Eurostat (nama_10_gdp) and (nama_10_a10_e)

Consumption and investment

Turning to an analysis of the development of GDP components from the expenditure side, it can be noted that final consumption expenditure across the EU rose by 11.2 % in volume terms between 2005 and 2020 (see Figure 7), despite slight falls in 2009, 2012 and 2013, and a larger fall in 2020 (down 4.9 %). Final consumption expenditure of general government rose at around twice the pace of final consumption expenditure as a whole, up 22.0 % across the EU between 2005 and 2020, despite slight falls in 2011 and 2012. Final consumption expenditure of general government increased 1.4 % in 2020, the only expenditure item shown in Figure 6 to record an increase during the year that the COVID-19 crisis started. During the same period, gross capital formation was relatively volatile: it increased between 2005 and 2007 by 14.9 %, fell by a greater amount (17.7 %) between 2007 and 2009 (during the global financial and economic crisis) and then followed a less volatile path between 2009 and 2013. Regular growth resulted in an overall increase of 27.0 % between 2013 and 2019, which was reversed by a fall of 8.9 % in 2020, the largest fall among the expenditure items shown in Figure 7. The growth in EU exports exceeded the growth in EU imports in 2008, between 2010 and 2013, and again in 2017, whereas imports grew faster in the other years from 2005-2020. In 2020, EU exports fell 8.6 % compared with 2019, while imports fell 8.3 %. Exports were 54.0 % higher in 2020 than in 2005, whereas the equivalent increase for imports was 50.4 %.

Figure 7: Developments for real consumption expenditure, gross capital formation, exports and imports, EU, 2005-2020
(2005 = 100)
Source: Eurostat (nama_10_gdp)

Having grown each year from 2005 to 2008, consumption expenditure by households and non-profit institutions serving households (NPISH) in the EU fell 1.1 % in 2009. Growth in 2010 (0.9 %) and 2011 (0.3 %) returned this expenditure to its 2008 level, before it fell again in 2012 (down 0.9 %) and 2013 (down 0.5 %). Thereafter, consumption expenditure by households and NPISHs increased during six consecutive years, accelerating from 1.1 % growth in 2014 to 2.2 % in 2016 and 2017, before slowing to 1.5 % in 2019. In 2020, this sustained period of growth was reversed, as consumption expenditure by households and NPISHs fell 7.3 %.

In 2010, the pace of growth for EU general government expenditure slowed in volume terms and this rate of change remained relatively stable (within the range of -0.2 % to 0.4 %) between 2011 and 2013, before returning to somewhat stronger growth (between 1.0 % and 1.9 %) from 2014 to 2020; the increase in 2020 was 1.4 %.

Despite an increase in 2011 (2.0 %), EU gross fixed capital formation (investment) failed to fully recover from its sharp fall in 2009 (-11.3 %) and smaller falls in 2008 (-0.3 %) and 2010 (-0.4 %). The rate of change turned negative again in 2012 (-2.8 %) and 2013 (-2.0 %). However, increases in investment were observed in each of the next six years, rising in the range of 2.1-5.5 % each year. As for most other expenditure indicators, this period of growth came to an abrupt end in 2020, when investment fell by 7.4 %.

Figure 8: Real annual rate of change in expenditure components of GDP, EU, 2005-2020
(%)
Source: Eurostat (nama_10_gdp)

In current price terms, consumption expenditure by households and non-profit institutions serving households contributed 51.9 % of the EU’s GDP in 2020, the share of general government expenditure was 22.6 % and that of gross capital formation was 21.5 %. The external balance of goods and services had a share of 4.0 % (see Figure 9).

Figure 9: Expenditure components of GDP at current market prices, EU, 2020
(% share of GDP)
Source: Eurostat (nama_10_gdp), or (tec00009), (tec00010), (tec00011) and (tec00110)

Among the EU Member States, there was a wide variation in investment intensity (see Figure 10). This may, in part, reflect different stages of economic development as well as growth dynamics over recent years, in particular the impact of the COVID-19 crisis. In 2020, gross fixed capital formation (in current prices) as a share of GDP was 21.6 % in the EU and almost the same (21.5 %) in the euro area. It was highest in Estonia (31.3 %), Ireland (29.9 %) and Hungary (27.3 %), while Czechia (25.1 %), Austria (24.9 %), Sweden (24.8 %) and Romania (24.6 %) all recorded shares around 25.0 %. The lowest share by far was in Greece (11.1 %).

Figure 10: Gross fixed capital formation at current market prices, 2020
(% share of GDP)
Source: Eurostat (nama_10_gdp)

The vast majority of investment in the EU was made by the private sector, as can be seen from Table 5; note that data for many EU Member States are for 2019 and therefore these data do not reflect the impact of the COVID-19 crisis on investment. In 2020, investment by businesses and households accounted for 18.8 % of the EU’s GDP, whereas the equivalent figure for public sector investment was 3.3 %.

Relative to GDP, Hungary (6.2 %; 2019 data) had the highest ratio of public investment to GDP, while investment by the business sector was highest in Ireland (41.3 %; 2019 data), Czechia (16.8 %; 2019 data) and Hungary (16.6 %; 2019 data) and by households it was highest in Cyprus (9.1 %; 2019 data), Finland (7.1 %) and Germany (6.8 %). Investment by households (as a share of GDP) in 2019 was notably lower than in 2005 in Ireland, Greece and Spain, while it was notably higher in Romania; note that there is a break in series for Greece.

Table 5: Investment at current market prices, 2005, 2010, 2015 and 2020
(% share of GDP)
Source: Eurostat (nasa_10_ki)

Income

An analysis of GDP within the EU from the income side shows that the distribution between the production factors of income resulting from the production process was dominated by the compensation of employees (see Figure 11). This form of income accounted for 48.9 % of GDP at current market prices in 2020 in the EU and 49.5 % in the euro area. The shares for gross operating surplus and mixed income were 40.7 % of GDP in the EU and 40.4 % in the euro area. For taxes on production and imports less subsidies the shares were 10.4 % in the EU and 10.1 % in the euro area.

Ireland had by far the lowest share of the compensation of employees in GDP (27.4 %), followed by Poland (40.5 %), while a peak share of 55.2 % was recorded in Germany. The particularly low share in Ireland is a consequence of globalisation related effects.

Figure 11: Distribution of income at current market prices, 2020
(% share of GDP)
Source: Eurostat (nama_10_gdp)

The income aggregates had, by 2011, recovered from their losses experienced during the financial and economic crisis. In the EU, income from the compensation of employees increased every year from 2010 to 2019, gaining 30.7 % overall (in current price terms) between 2009 and 2019. For gross operating surplus and mixed income, overall growth was almost the same (up 30.4 % during the same nine-year period); this increase was composed of annual increases every year except for 2012. Income from taxes on production and imports increased each and every year from 2010 to 2019, resulting in overall growth of 43.5 %. The latest developments in 2020 (compared with 2019) were in contrast to the established series of increases: the compensation of employees decreased 1.7 %, gross operating surplus and mixed income decreased 4.7 %, and income from taxes on production and imports decreased by as much as 16.5 %.

Figure 12: Development of income at current market prices, EU, 2005-2020
(2005 = 100)
Source: Eurostat (nama_10_gdp)

Household consumption

Consumption expenditure of households accounted for at least half of GDP (at current market prices) in 2020 in 13 of the EU Member States; this share was highest in Greece (70.1 %), Cyprus (64.8 %) and Portugal (62.0 %). By contrast, it was lowest in Ireland (25.4 %) and Luxembourg (25.7 %); nevertheless, the latter had by far the highest average household consumption expenditure per inhabitant (PPS 20 395) — see Table 6 — even after adjusting for price level differences between Member States.

Table 6: Consumption expenditure of households, 2005, 2010, 2015 and 2020
Source: Eurostat (nama_10_gdp) and (nama_10_pc)

Aside from Luxembourg, average household consumption expenditure per inhabitant in PPS terms was also relatively high in 2020 in Germany (PPS 17 867), Denmark (PPS 17 826) and Austria (PPS 17 635). By contrast, Bulgaria was the only EU Member State to report that average household consumption expenditure per inhabitant was below PPS 10 000.

An analysis of real developments in average consumption expenditure per inhabitant in euro terms (based on a chain linked volume index) over the period 2015-2020 shows that the fastest growth was recorded in Romania, Bulgaria, Hungary and Lithuania, where annual average increases were in the range of 3.3-5.5 %. Austria recorded the largest decrease in household consumption expenditure per inhabitant, down on average by 1.6 % each year during the period from 2015 to 2020, while decreases averaging 1.0-1.4 % per year were also recorded in Spain, Luxembourg, Italy and Belgium.

Source data for tables and graphs

Data sources

The European system of national and regional accounts (ESA) provides the methodology for national accounts in the EU. The current version, ESA 2010, was adopted in May 2013 and has been implemented since September 2014. It is fully consistent with worldwide guidelines for national accounts, the 2008 SNA. Please note that most EU Member States carried out a benchmark revision in August-October 2019, while others completed their benchmark revision in 2020. For further details, please consult the Eurostat website and in particular this document and this article.

GDP and main components

The main aggregates of national accounts are compiled from institutional units, namely non-financial or financial corporations, general government, households, and non-profit institutions serving households (NPISH).

Data within the national accounts domain encompasses information on GDP components, employment, final consumption aggregates and savings. Many of these variables are calculated on an annual and on a quarterly basis.

GDP is the central measure of national accounts, which summarises the economic position of a country (or region). It can be calculated using different approaches: the output approach; the expenditure approach; and the income approach.

An analysis of GDP per inhabitant removes the influence of the absolute size of the population, making comparisons between different countries easier. GDP per inhabitant is a broad economic indicator of living standards. GDP data in national currencies can be converted into purchasing power standards (PPS) using purchasing power parities (PPPs) that reflect the purchasing power of each currency, rather than using market exchange rates; in this way differences in price levels between countries are eliminated. The volume index of GDP per inhabitant in PPS is expressed in relation to the EU average (set to equal 100). If the index of a country is higher/lower than 100, that country’s level of GDP per head is above/below the EU average; this index is intended for cross-country comparisons rather than temporal comparisons.

The calculation of the annual rate of change of GDP using chain linked volume indices (real changes) is intended to enable comparisons of the dynamics of economic development both over time and between economies of different sizes, irrespective of price levels.

Complementary data

Economic output can also be analysed by activity. At the most aggregated level of analysis used for national accounts, 10 NACE headings are identified: agriculture, forestry and fishing; industry; construction; distributive trades, transport, accommodation and food services; information and communication; financial and insurance activities; real estate activities; professional, scientific, technical, administrative and support services; public administration, defence, education, human health and social work; arts, entertainment, recreation, other services and activities of household and extra-territorial organisations and bodies.

An analysis of output by activity over time can be facilitated by using a volume measure (real changes), in other words, by deflating the value of output to remove the impact of price changes; each activity is deflated individually to reflect the changes in the prices of its associated products.

A further set of national accounts data is used within the context of competitiveness analyses, namely indicators relating to the productivity of the workforce, such as labour productivity measures. Productivity measures expressed in PPS are particularly useful for cross-country comparisons. GDP per person employed is intended to give an overall impression of the productivity of national economies. It should be kept in mind, though, that this measure depends on the structure of total employment and may, for instance, be lowered by a shift from full-time to part-time work. GDP per hour worked gives a clearer picture of productivity as the incidence of part-time employment varies greatly between countries and activities.

Annual information on household expenditure is available from national accounts compiled through a macroeconomic approach. An alternative source for analysing household expenditure is the household budget survey (HBS): information for the latter is obtained by asking households to keep a diary of their purchases and is much more detailed in its coverage of goods and services as well as the types of socioeconomic analysis that are made available. The HBS is only carried out and published every five years: the latest reference year for which data are currently available is 2015.

Symbols

Note on tables:

  • italics are used to show where data are estimates or provisional;
  • a colon ‘:’ is used to show where data are not available.

Context

European institutions, governments, central banks as well as other economic and social bodies in the public and private sectors need a set of comparable and reliable statistics on which to base their decisions. National accounts can be used for various types of analysis and evaluation. The use of internationally accepted concepts and definitions enables an analysis of different economies, such as the interdependencies between the economies of the EU Member States, or a comparison between the EU and non-member countries.

Business cycle and macroeconomic policy analysis

One of the main uses of national accounts data relates to the need to support European economic policy decisions and the achievement of economic and monetary union (EMU) objectives with high-quality short-term statistics that allow the monitoring of macroeconomic developments and the derivation of macroeconomic policy advice. For instance, one of the most basic and long-standing uses of national accounts is to quantify the rate of growth of an economy, in simple terms the growth of GDP. Core national accounts figures are notably used to develop and monitor macroeconomic policies, while detailed national accounts data can also be used to develop sectoral or industrial policies, particularly through an analysis of input-output tables.

Since the beginning of the EMU in 1999, the European Central Bank (ECB) has been one of the main users of national accounts. The ECB’s strategy for assessing the risks to price stability is based on two analytical perspectives, referred to as the ‘two pillars’: economic analysis and monetary analysis. A large number of monetary and financial indicators are thus evaluated in relation to other relevant data that allow the combination of monetary, financial and economic analysis, for example, key national accounts aggregates. In this way monetary and financial indicators can be analysed within the context of the rest of the economy.

The Directorate-General for Economic and Financial Affairs monitors economic developments. The EU has a yearly cycle of economic policy coordination called the European Semester. Each year, the European Commission conducts a detailed analysis of EU Member States’ plans for budgetary, macroeconomic and structural reforms and provides country-specific recommendations for the following 12-18 months.

The Directorate-General for Economic and Financial Affairs also produces the European Commission’s macroeconomic forecasts four times a year (autumn, winter, spring and summer), in coordination with the annual cycle of the European Semester. These forecasts cover all EU Member States in order to derive forecasts for the euro area and the EU, and often also include outlooks for candidate countries, as well as some (other) non-member countries.

The analysis of public finances through national accounts is another well-established use of national accounts statistics. Within the EU a specific application was developed in relation to the convergence criteria for EMU, two of which refer directly to public finances. These criteria have been defined in terms of national accounts figures, namely, government surplus/deficit and government debt relative to GDP; see the article on government finance statistics for more information.

Regional, structural and sectoral policies

As well as business cycle and macroeconomic policy analysis, there are other policy-related uses of the EU’s national and regional accounts data, notably concerning regional, structural and sectoral issues.

The allocation of expenditure for the structural funds is partly based on regional accounts. Furthermore, regional statistics are used for ex-post assessment of the results of regional and cohesion policy.

An economy that works for people is a strategic priority for the EU and the Member States. In support of these strategic priorities, common policies are implemented across all sectors of the EU economy while the Member States implement their own national structural reforms.

The European Commission conducts economic analysis contributing to the development of the common agricultural policy (CAP) by analysing the efficiency of its various support mechanisms and developing a long-term perspective. This includes research, analysis and impact assessments on topics related to agriculture and the rural economy in the EU and non-member countries, in part using the economic accounts for agriculture.

Target setting, benchmarking and contributions

Policies within the EU are increasingly setting medium or long-term targets, whether binding or not. For some of these, the level of GDP is used as a benchmark denominator, for example, setting a target for expenditure on research and development at a level of 3.00 % of GDP (which was one of the Europe 2020 targets).

National accounts are also used to determine EU resources, with the basic rules laid down in a Council Decision. The overall amount of own resources needed to finance the EU budget is determined by total expenditure less other revenue, and the maximum size of the own resources are linked to the gross national income of the EU.

As well as being used to determine budgetary contributions within the EU, national accounts data are also used to determine contributions to other international organisations, such as the United Nations (UN). Contributions to the UN budget are based on gross national income along with a variety of adjustments and limits.

Analysts and forecasters

National accounts are also widely used by analysts and researchers to examine the economic situation and developments. Social partners, such as representatives of businesses (for example, trade associations) or representatives of workers (for example, trade unions), also have an interest in national accounts for the purpose of analysing developments that affect industrial relations. Among other uses, researchers and analysts use national accounts for business cycle analysis and analysing long-term economic cycles and relating these to economic, political or technological developments.

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Main GDP aggregates (t_nama_10_ma)
Auxiliary indicators (population, GDP per capita and productivity) (t_nama_10_aux)
Basic breakdowns of main GDP aggregates and employment (by industry and by assets) (t_nama_10_bbr)
Detailed breakdowns of main GDP aggregates (by industry and consumption purpose) (t_nama_10_dbr)
Regional economic accounts - ESA 2010 (t_nama_10reg)
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)
Detailed breakdowns of main GDP aggregates (by industry and consumption purpose) (nama_10_dbr)
Breakdowns of non-financial assets by type, industry and sector (nama_10_nfa)
Regional economic accounts (nama_10reg)

Notes

* This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo declaration of independence.