A recent study compared the living standards in the UK and Ireland


The relative living standards of the UK and the Republic of Ireland have recently been compared in new research.

It concludes that while Ireland's economic output per capita is higher, its consumption per capita is significantly lower.

Ireland's lower consumption is partially explained by a higher rate of savings, but it may also be a result of the difficulty in comparing the cost of housing between the two nations.

The Economic and Social Research Institute (ESRI) has published Prof. John Fitzgerald's research.

GDP per capita is typically used to compare economic performance across nations.

Gross national income (GNI*) is a substitute measure that is now most frequently used to evaluate Irish economic output because Irish GDP is significantly distorted by the operations of multinational corporations.

In order to make Irish GNI* per head broadly comparable to GDP per head in other countries, Prof. Fitzgerald then makes additional adjustments for price differences.

According to Prof. Fitzgerald, in the early 2000s, Ireland's standard of living was comparable to that of Germany, the UK, and the EU15 on this metric.

Although the Irish standard of living was up to 10% higher in 2007 than in those nations, Ireland's banking and real estate crises had a significant impact.

The Irish standard of living in 2011 was about 20% lower than that of Germany and 10% lower than that of the UK and the EU15.

Since Ireland's economy began to recover in 2012, the effects of that crisis have been reversed. According to the data, by 2019, the Irish standard of living was eight percent higher than that of the UK, and by 2021 it had once again reached German levels, though it was still lower than that of the Netherlands.

Additionally, using data from 2019, the paper examines consumption per head, which provides a different perspective.

When relative prices were taken into account, the consumption in Ireland was €24,500 (£21,054) per head while it was over €27,000 (£23,196) in the UK.

Using more recent data, Prof. Fitzgerald also makes an alternative price adjustment that contends that, based on final consumption per person in 2019, living standards in Ireland were lower than the averages for the UK and the EU.

According to his conclusion, Ireland's high savings rate "holds out the prospect of significant growth in the future, as these savings are appropriately invested or even consumed.".

In the short term, consumption per head (public and private) is a better indicator of living standards, he continues.

"Due in part to our current high level of savings, Ireland may perform worse on this metric than some of its European neighbors.

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