04 Dec 2015

What drives household consumption in the EU-28?

Sylvain Bouyon

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Author: Sylvain Bouyon

Series: ECRI Commentary No. 19  No of pp: 9

Given that final consumption of households has contributed on average to broadly 60% of EU-28 GDP since 2001, an assessment of the drivers behind its dynamics is quite timely in a context of gradual economic recovery. The empirical analyses presented in this ECRI Commentary, covering 19 of the EU-28 economies, suggest that disposable income of households, consumer credit markets and the developments in housing markets have had a significantly positive impact on the growth of household final consumption since 2001. On the other hand, demographic trends do not seem to have played any significant role.

This ECRI Commentary is one of two on the topic of household consumption in the EU, published simultaneously by the same author; ECRI Commentary No.18, entitled “Household Final Consumption in the EU: The key driver for a sustainable recovery?” looks at the major developments since the crisis of 2008.

Sylvain Bouyon is a CEPS-ECRI Research Fellow.