A new study by Judith Niehues and Maximilian Stockhausen at IW Köln examines how wealth is distributed across the 27 EU member states and how these disparities shift when viewing the EU as a unified entity. It reveals significant insights into national and supranational economic inequalities.

When using national thresholds to measure poverty risk, several Eastern European countries emerge with notably low rates. Conversely, Luxembourg, Belgium, and the Netherlands lead the rankings when considering the average EU living standards. For instance, Germany's poverty risk rate stood at 14.8% in 2021, positioning it comfortably in the mid-range of the EU-27 when viewed through a national lens. However, using a Europe-wide poverty threshold, Germany ranks among the third of countries with the lowest adjusted poverty risks.

Income distribution analyses traditionally focus on individual member states, highlighting Denmark, Finland, and Sweden for their equality in the past. However, Slovakia, Slovenia, and the Czech Republic now lead the rankings with Gini coefficients between 20.9 and 21.8, indicating a more equal income distribution. Slovakia, in particular, boasts the most homogeneous income distribution in the EU.

In contrast, Bulgaria, Lithuania, and Latvia exhibit the highest income inequalities with Gini coefficients of 38.4, 36.2, and 34.3, respectively. Correspondingly, these countries also report high relative poverty risk rates. In 2021, Bulgaria had a poverty risk rate of 22.9%, the highest in the EU, while the average poverty risk across the EU-27 was 16.5%.

Viewing the EU as a single entity changes the landscape significantly. Income comparisons must account for price level differences, converting national incomes into purchasing power standards (KKS). Germany's adjusted median income in 2021 was 1,942 KKS, well above the EU median of 1,529 KKS. Under this framework, only 7.1% of Germans are at risk of poverty, compared to the national figure of 14.8%. Many Germans, considered "lower middle class" nationally, ascend to the European middle class or even upper middle class in this broader context.

These shifts underline Germany's relatively high wealth level compared to the EU average. The data, derived from the 2022 EU-SILC survey, emphasize the importance of considering both national and European perspectives in understanding economic disparities and risks.

Such analyses are essential as the EU continues to strive for greater economic cohesion and equality among its member states.