Saturday, 1 June 2013

Warsaw wealthier than most of UK shock!

Just over two months ago, the European Commission published a press release which gave a breakdown of the EU's regions in terms of gross domestic product. It was met with much applause in Poland, (and even in the Financial Times), showing that the GDP per capita of Poland's wealthiest region, Mazowsze (or, if you insist, Mazovia) has exceeded the European average at 102%. Note - this is using purchasing power parity, or purchasing power standards (PPS).

However, few journalists drilled down deeper into Eurostat's data. Mazowsze is Warsaw plus some very disadvantaged towns lying to the capital's south, east, north and west. Radom, for example, a mere 60 miles south of Warsaw, has 23.7% unemployment, compared to Warsaw's 4.9%. Szydłowiec, south of Radom, currently has 38% of its population out of work. Many other districts of Mazowsze have unemployment in excess of 20%, as well as glaring poverty.

Mazowsze, then, is a statistical aberration, and lumping an economically vibrant Warsaw together with all this poverty has the effect of a) understating Warsaw's wealth and b) depriving poor, outlying districts of greater financial support. [I've long held that Warsaw and its outlying powiats should become a voivodship or province in its own right.]

So - let's look at Warsaw on its own. According to calculations by PwC and GUS, Warsaw's GDP per capita were in 2010 (the latest full-year data) between €27,500 and €28,000. And we're not talking PPS, but nominal. I'd err on the side of the lower number, as Warsaw's head-count is notoriously under-stated (many people work here whose officially registered abode is elsewhere). Now - bear in mind that Poland's economy continued to grow by a robust 4.5% in 2011 and by 1.9% in 2012, but that the zloty weakened against the euro - that figure's still about right.

Now - let's compare that €27,500 against the UK in 2010. [Remember the UK's economy grew by 1.0% in 2011 and an anaemic 0.3% last year, and sterling also lost ground against the euro].

As it happens, Eurostat gives the UK's GDP per capita as... €27,500. So which bits of the UK are wealthier (or more accurately, create more wealth) than Warsaw?

From the top then: Inner London (€81,100 - no surprises there). North-Eastern Scotland (€39,900 - that's Aberdeen and the North Sea Oil industry). Berkshire, Buckinghamshire and Oxfordshire (€35,300 - the rich Home Counties). Cheshire (€29,100 - home of wealthy Mancunians). Surrey, East and West Sussex (€28,200). Gloucestershire, Wiltshire and the Bristol/Bath area (€28,500). Bedfordshire and Hertfordshire (€27,800). And that's it! These are the ONLY parts of the UK to exceed Warsaw's wealth per capita.

Yorkshire, East and West Midlands, the North-East, Wales, East Anglia, Northern Ireland, as well as Outer London, Essex, Kent, Hampshire, most of Scotland, most of the North-West and South-West - are all POORER than Warsaw!

Warsaw is closer in terms of wealth to the UK than it is to the rest of Poland. The average for Poland (pulled up by Warsaw) is €9,200. The poorest part of Poland is Lubelskie (€6,200). The sad thing is that the gulf between rich Warsaw and the poorer regions is growing each year.

See this map (below, click to expand) to see how Poland's wealth looks across the regions. From yesterday's Gazeta Wyborcza.

The capital city effect is present in both countries. But in terms of living standards, where the costs of housing, school education, food and transport are much lower, Warsaw offers a much quality of life than London. And indeed, if you look at Warsaw's GDP per capita through the prism of purchasing power parity, it comes out looking even better. And this explains why companies catering for the rich can charge higher prices in Warsaw than in London for fancy cars and posh clothes.

The revelation that Warsaw's a wealthier market than most of the UK comes as I'm about to head off for London, promoting Poland as a export opportunity destination to British companies in the food and drink and sports and leisure sectors. UK firms who say 'Poles are poor and can't afford our products' need to take a closer look at Warsaw.

This time last year:
Opening of the railway line to Warsaw's Okęcie airport


Anonymous said...

I know where you are coming from re. selling Poland as an export destination however I cant imagine many companies - except perhaps for LVMH, Bentley etc. coming up for a marketing strategy only for inner London.
Would be great if Poland also addressed this issue by extending the reach of Warsaw - high speed rail connections between Radom, Kielce, Lodz, Siedlce etc would spread some of this wealth into what would become the Home Counties of Warsaw! Aye - that will be the day - not when developers can build those awful blocky's all over any green space within warsaw district boundaries

Artur said...

Poland is now a divided nation, both politically and economically! Enlargement of EU, and Poland's entry to the group, has created massive disadvantage in certain regions, followed by corruption and mishandling of EU funds! As the article suggests some regions have 38% unemployment rate, which has made many young pople from those regions to immigrate. See regions around places like Radom, Opatow, Lodz, Marlbork, Sczecin - corruption, closing of many companies and lack of drive to create local employment. In places mentioned below, an uneducated PSL party controls political arena, and is now famous for corruption, and controlling government authorities, like ARiMR, MR etc. Exploitation of polish workers, lack of HR Laws, redundancies, and massive taxation is another story. Poland has long to go before it establishes itself as a strong international partner, abale to create it's own wealth.

Sigismundo said...

Lies, damn lies and statistics!

I have serious reservations about these numbers. How was GDP apportioned per capita? Is it not a simple fact that since most Polish companies are registered in Warsaw, their profits will be designated as from Mazovia, even though the factories, etc may be somewhere else?

Surely average personal income is a far more meaningful statistic to use, and here I suspect Warsaw is still well in the shadow even of Hull.

Michael Dembinski said...

@ Anon:
I'd like to see the wealth spreading outwards from Wrocław, Poznań, Kraków, Katowice and Tri-City rather than watching Warsaw becoming a pre-eminent giant like London, dwarfing all other cities.

@ Artur:
Statistical methodology please rather than generalisations about corruption. Anyway, Poland has been consistently improving in this regard over the past seven years.

@ Sigismundo:
Yes, there is an issue as to company registration, but I don't believe Warsaw's 'true' GDP per capita is lower than Hull's.