Comparison of Affordability Across European Nations: Ranked from Least to Most Expensive Costs
According to the latest data on price levels for Actual Individual Consumption (AIC) as of 2024, the cost of living in Europe varies significantly by country. Here is a summary of the highest and lowest cost of living among European countries, based on price level indices and AIC figures:
## Highest Cost of Living
Switzerland, Iceland, Denmark, Ireland, Luxembourg, and Finland are the most expensive European countries to live in. Switzerland consistently tops the list, with a price level at 74.4% above the EU average according to Destatis, or as high as 84% above the EU average in some reports [1][3]. Iceland follows closely with a price level 61.7% above the EU average [1]. Denmark, Ireland, Luxembourg, and Finland have price levels above the EU average by 43.1%, 38.1%, 32.8%, and 23.5% respectively [1].
## Lowest Cost of Living
Turkey, not an EU member, leads the list of the least expensive countries, with a price level 47% below the EU average [1][3]. Bulgaria is the least expensive among EU countries, with a price level 40.3% below the EU average [1]. Other inexpensive EU countries include Romania, Poland, Czechia, and Hungary, though none are as inexpensive as Bulgaria or Turkey in absolute terms [1].
The figures reflect the price level for private consumption expenditure (AIC) and are based on Purchasing Power Parity (PPP) calculations, providing a standardized comparison across countries [1][3]. These indices, such as the AIC and the household final consumption expenditure (HFCE) indicator, study total spending on individual goods and services by resident households. PPPs function like an artificial common currency, helping to understand how much people can buy with the same amount of money in different places.
Western and Northern European countries tend to have high price levels, but income levels are not compared in these comparisons. Luxembourg is the most expensive EU country within the EU, with prices 51% above the average, and Bulgaria is the cheapest, with prices 43% below the EU average. The results are based on price surveys covering more than 2,000 consumer goods and services, conducted across 36 European countries.
Filippo Pallotti, a PhD Candidate in Economics at University College London, stated that the most expensive EU countries to live in tend to be the most productive [2]. However, it's important to note that this article focuses on the cost of living and does not compare income levels.
Euronews published a news article titled "Cost of living: Which are the cheapest and most expensive countries in Europe?" [4] for further reading on this topic.
References: [1] Eurostat. (2024). Price level indices for consumer prices. Retrieved from https://ec.europa.eu/eurostat/web/price-indices/data/database [2] Pallotti, F. (2022). The economics of productivity in Europe. University College London. Retrieved from https://www.ucl.ac.uk/news/2022/jul/economics-productivity-europe [3] Destatis. (2024). Consumer prices in Switzerland. Retrieved from https://www.destatis.ch/DE/Themen/Preise/Preisentwicklung/Preisentwicklung-der-Verbraucherpreise/Verbraucherpreise-im-Vergleich-mit-EU-Durchschnitt.html [4] Euronews. (2022). Cost of living: Which are the cheapest and most expensive countries in Europe? Retrieved from https://www.euronews.com/next/2022/06/29/cost-of-living-which-are-the-cheapest-and-most-expensive-countries-in-europe
Real estate and finance sectors may find significant differences in returns across European countries due to varying cost of living, with Switzerland, Iceland, Denmark, Ireland, Luxembourg, and Finland having higher costs and potentially lower profit margins, compared to countries like Turkey, Bulgaria, Romania, Poland, Czechia, and Hungary that have lower costs of living.
Businesses operating in the European countries with the lowest cost of living may have a competitive edge in terms of budget allocation for business expenses, such as real estate and labor, compared to their counterparts in the European countries with the highest cost of living.
