HIGH PRICES

Denmark has for some years had the highest tax take in the world. One consequence of that is high prices, not least because VAT is 25% and applied to pretty much everything, including basic foodstuffs.

New research by the E.U. shows just how high those prices are. If the 28-member E.U. index average is 100, then Denmark's consumer prices are a whopping 139.4 and food prices 136.4. Sweden, Finland and Luxemburg all are all over 120, but the numbers are a lot higher than competitors such as Germany (102.3 and 108.6) and the U.K. (114.6 and 99.3, the latter much lower since food is zero rated for VAT). Let alone Romania (54.0 and 68.7) or Bulgaria (49.0 and 69.8).

Over time, prices and incomes within the E.U. should harmonise, in the same way as they do nationally. However, what these figures show is that that process is a slow one, not least because the E.U. lacks a redistributive tax and spending authority such as national governments have.

High prices are definitely a pain. But you should not feel too sorry for the Danes. Property is still cheap compared with (say) the U.K., many public services are free, and interest rates are ridiculously low. I certainly don't feel poor.

Walter Blotscher