Ireland overtakes Finland as Europe's costliest place

Ireland is on the brink of becoming the most expensive place to live in the 12-nation eurozone this year, overtaking even Finland, a survey indicated yesterday.

The document illustrates that, despite the advent of the European single currency, vast price disparities remain across the 12 participating nations, particularly for alcohol and tobacco which are taxed differently in each country.

The report from an Irish government agency, the national policy advisory board, Forfas, suggests that "consumer prices in Ireland may now be equal to those in the UK". That would mean that, of all 15 EU countries, only Denmark and Sweden - which do not use the euro - will be more costly for consumers.

Portugal was the cheapest country in the eurozone for consumers in 2002, followed by Greece, Spain and Italy. Residential rents in Portugal were a fifth of those in Ireland, the report found.

Overall, the cost of living is still highest in Finland. It was followed closely by Ireland, which was some way ahead of Germany. Then the Netherlands and four middle-ground countries were grouped closely together: Luxembourg, France, Belgium and Austria.

But the document from Forfas says: "Ireland looks set to emerge as the most expensive country within the eurozone in the very near future if current inflation differentials between the eurozone's two most expensive countries persist".

Forfas discovered that there was a big price difference across the countries surveyed for a basket of drink and tobacco containing the same items. The document says that "at €77 (£55) [in Ireland], the cost of this basket of goods from a mid-priced outlet is €34 higher ... than in Italy, €33 higher than in Germany and €26 higher than in Luxembourg. By contrast, residents of Finland paid €17 more for this basket of goods in 2002 than residents of Ireland."

But the document says that the "relatively high level of price divergence between eurozone countries" is "heavily influences by government policy on indirect taxation, ie alcohol and tobacco".

Prices in supermarkets across the 12-nation bloc are less variable, although there was still a significant difference. Portugal was the cheapest at €169.10, followed by Finland at €170.70. The same items cost €176.60 in Spain and €185.70 in Italy.

In Ireland, the total of €217.60 was "broadly in line with that paid by French consumers (€217.30), [but] it is at least €17 more than that paid in any of the remaining ... countries", the survey said.

There were bigger differences in the cost of a three-course dinner for two in a high-class restaurant. Portugal was the cheapest at €110, followed by Greece at €115, Belgium at €132.50, Germany at €159.50, France and Ireland at €175, Austria at €190 and Spain at €193.80.

The study singled out a series of goods and services that are hitting Irish pockets hard: food, rents, alcohol and tobacco, and pubs and restaurants. By contrast, clothing and footwear, communications and household utilities were relatively cheap, Forfas said.