EU fiscal policy effectiveness can be better shown

Significance

Measures of AIC per capita at purchasing power parities (PPS) show goods and services consumed by households and individuals, an indication of their material welfare. Some of the EU-11 were by this measure on a par with southern Europe, but five have AIC levels well below the EU average.

Impacts

• Governments will continue to measure their success both by GDP growth but also by reducing poverty and inequality.
• AIC measures have significant potential as a tool for fine-tuning regional and cohesion policies.
• More detailed data could clarify which parts of government and not-for-profit spending affect households most.
• Current geographical hierarchies within the EU may be shifting.