The average European has €11,699 available for consumer purchases in 2009. This is one of many results contained in the recently released "GfK Purchasing Power Europe 2009/2010" study, which reveals the regional distribution of purchasing power in 41 European countries. This year's study shows the repercussions of the economic crisis in affected countries such as Ireland and Iceland, giving companies an indispensable guide to the European regions in which sales and marketing efforts are most likely to produce favorable results.

Before entering a new market, it’s vital to determine the locations in which it is worth investing. In the absence of objective, fact-based analyses, strategic decisions involving expansions, new locations, changes to product offerings and marketing campaigns pose significant financial risks to companies. GfK Purchasing Power provides this much-needed objective foundation for making sound business decisions across 41 European countries at the level of municipalities and postcodes. The comparability of the data gives companies that sell directly or indirectly to end-consumers a powerful tool for locating the areas of greatest market potential.

8 trillion euros available for consumer purchases in Europe

Europeans have approximately 8 trillion euros of income available for consumer purchases in 2009. This figure includes government pay-outs such as unemployment benefit, child benefit and pensions. This corresponds to an average per capita purchasing power of €11,699 for the 41 countries under review. Purchasing power levels vary significantly according to region: For example, Norwegians enjoy a per capita income of €20,535, while Bulgarians command on average only €2,850 per person.

Purchasing power average falls by approximately €800

The European purchasing power average fell by approximately €800 compared to the previous year. The resulting decline in consumption places additional pressure on the economy and retail sector. The negative currency tendencies of several non-euro countries are a decisive factor with regard to purchasing power development. These fluctuations affect the purchasing power statistics compiled in euros, in this case negatively. The European Central Bank predicts (reference date: May 5, 2009) a devaluation of approximately 21% in Poland's currency compared to the previous year. Stark declines against the euro are also anticipated for the currencies of other countries in Western and Southeastern Europe (including a drop of 12% in Great Britain and Sweden, and 14% in Hungary and Belarus).

Purchasing power rankings reshuffled, with Slovenia overtaking Portugal

The crisis has also led to some changes among the purchasing power rankings of individual countries. For example, Germany is once again among the top 10, while hard-hit Ireland and Iceland slip out of the top 10 for the first time in years. "Germany's 2009 purchasing power remains stable compared to that of other European countries," explains Simone Baecker-Neuchl, head of Market Data & Research at GfK GeoMarketing. "This is thanks to the economic stimulus program – for example, state-funded reductions in working hours (Kurzarbeit). This approach has kept unemployment in check and brought stability to the average purchasing power."

The east-west divide remains clearly discernible: Efforts among central and eastern European countries to close the gap between themselves and Western Europe markedly decelerated in 2009. The ranking sequence of countries in Western Europe has also changed, with Slovenia overtaking Portugal in the rankings. Despite the improvement, Slovenia's purchasing power still lies around €1,600 below the European average. Baecker-Neuchl explains that some countries that enjoyed periods of growth prior to the financial crisis experienced significant setbacks in 2009: "Ireland is especially hard-hit by the crisis, with a drop of 18 percent in purchasing power. The Baltic states are also strongly affected, with declines in purchasing power between 10 and 28 percent."

These rankings are, however, less telling than in previous years due to continuing currency fluctuations. "Europeans' actual wealth is closely linked to local price levels, which are not considered by the study," explains Baecker-Neuchl. "Even so, the currency-dependent purchasing power values are invaluable for international retailers who estimate their anticipated turnover in euros. For retailers planning operations within a specific region, it's also important to take regional differences into account in order to precisely locate the available potential and increase regional market share."

GfK Purchasing Power 2009/2010 offers purchasing power data for all regions of 41 European countries down to the level of municipalities and postcodes. The dataset thus shows – even amidst the crisis – Europe's most promising regions with regard to consumption potential.