Before you get all outraged about the new report from the Central Statistics Office declaring Ireland the second most expensive country in Europe, take a minute and reflect that it’s probably not that surprising:
Irish consumers pay the second highest prices in Europe, according to new figures from the Central Statistics Office.
The country also has the highest proportion across the EU of graduates in the so-called STEM subjects of mathematics, science and technology.
The Measuring Ireland’s Progress report for 2018, published by the CSO, paints a picture of the country based on a wide range of indicators compared to the rest of the EU.
It shows that Ireland still has the highest proportion of young people in Europe and second lowest proportion of people over 65.
But that is changing and the report notes that the number of over-65s here grew by almost 40% or just over 197,000 in the past decade.
Prices paid by consumers here are 27.3% above the EU average, making us the most expensive after Denmark.
There are a couple of obvious reasons why Ireland would be a more expensive place to live, than, say Poland. The first is geography: It’s simply more expensive to import goods to Ireland than it is to a central European country because so many of our goods have to be transported by sea or air.
Second, tourism being a huge part of our economy is a factor. Ireland markets itself to wealthy Americans and Japanese tourists, and wealthy tourists can generally bear slightly higher costs, so restaurant and hotel costs here are likely to be higher than in, say, Budapest.
Third, and this is probably the most important, is the question of to whom we are being compared. Bulgaria is at half the EU average, Ireland is 27% above it. It seems obvious from the figures that there are far more countries below the average than above it, and that the poorer eastern European states who joined the EU in the past two decades are pulling the average down at our expense.
It would probably be fairer to compare Ireland’s prices to the more developed countries in the EU – France, Germany, The Netherlands, Belgium, and the rest. No such figures are readily available, sadly, but the graph in the RTE story linked above suggests that those numbers would be much less headline grabbing.
There’s also the question of how the statistics are arrived at. For example, Ireland has punitively high taxes compared to other European countries on things like cigarettes and alcohol. We’ve embraced sin taxes in a way few other European nations have, meaning that if you’re a smoker, 27% probably understates the extent to which you’re getting punished for living on this little island. Similarly, the Irish Government’s unique Vehicle Registration Tax adds huge sums to the cost of cars here, and our high fuel taxes add to the costs of transport.
The real culprit, of course, is the cost of housing itself. The average rent in Brussels in 2018 was €740 per month. In Dublin, it was almost three times that. It is about €12,000 a year more expensive to rent in Dublin, on average, than in Amsterdam. In Rome or Milan, a one bedroom apartment will cost you about €700 per month – about half the rate in Dublin.
That naturally leaves Irish people with even less to spend on everything else, meaning the 27% above average prices for everything else feel even more expensive than they actually are.
Solve the housing crisis, and the country will feel a lot cheaper for many young people in particular.
On that note, Fianna Fáil appear to be fully embracing the madness this morning:
Rent freezes for hard-pressed tenants could soon be introduced, with Fianna Fail set to drop its opposition to the controversial policy.
During the General Election campaign, Fianna Fail insisted rent freezes were not legally possible and would interfere with property rights.
However, following its first day of government formation talks with the Green Party, it is now considering the introduction of short-term caps on rents.
“We are open to negotiation and agreement on it because we realise people deserve to see some immediacy to help renters rather than pawn them off with a legal opinion,” a senior Fianna Fail source said.
Rent freezes (the clue is in the name) do not reduce rents by a single cent. All that they do is place a hard limit on how high they may legally go. The policy does not make more housing available, or reduce the amount of competition for existing units. In fact, it may take units off the market altogether as owners decide to sell rather than face increased regulation. Because the cost of building homes is also very high at the moment, the incentive to build homes for the rental market is progressively reduced with each passing year as rents fall behind the rate of inflation. A rent freeze amounts to a garotte for the rental market – a slow, agonizing death.
And the best bit? When FF realise their error, they’ll have no choice but to lift the rent caps, at which point every renter in the country will get a leaflet from Sinn Fein saying, perfectly accurately, that “Fianna Fail is putting up your rents”.
Unimaginably stupid. If Micheál Martin had brains, he’d be dangerous.