WRITTEN QUESTION E-1552/00

by Paulo Casaca (PSE) to the Commission

(18 May 2000)

Subject: Contradictory results produced by the various methods of calculating purchasing power parities (PPPs)

In its reply to written question E-0276/00(1) the Commission confirmed that the various methods of calculating PPPs produce contradictory results with regard to relative price levels in different countries and put forward a number of explanations for those differences.

Even if these explanations are valid, they in no way detract from the conclusion that, if different applications of PPPs made by equally credible institutions produce contradictory results, it is not acceptable to apply PPPs for the purposes for which the Commission has used them in the past.

As regards the explanations given, it should be borne in mind that, in contrast to the impression given in the reply, written question E-0276/00 did not refer to comparisons between GDP but only to comparisons between consumer prices by Eurostat and the Wiesbaden institute.

However, the remarks made on rents in Portugal and Germany are highly interesting and provide an objective basis on which to test Eurostat's results.

Is the Commission prepared to promote a rigorous and independent study of market housing prices in Germany and Portugal and the influence of administrative factors on non-market prices in the two countries?

Will the Commission undertake to revise its whole attitude to the use of PPPs if it is shown that:

1. At market prices, the share accounted for by spending on housing in Portugal is not four times lower than the corresponding figure in Germany but is probably higher;

2. Prices for housing of equivalent quality in Portugal and Germany are not 78 % lower in Portugal but are also likely to be higher in Portugal than in Germany?

(1) OJ C 303 E, 24.10.2000, p. 170.

Answer given by Mr Solbes Mira on behalf of the Commission

(10 July 2000)

In its reply to written question E-0276/00(1), to which the Honourable Member refers, the Commission did not seek to compare two methods of calculating purchasing power parities, but two methods by which spatial comparisons of price statistics can be calculated. One of these methods, the Commission method, produces a definition of purchasing power parities in accordance with the only methodology which is internationally accepted and proven (in particular, by the 15 Member States).

With regard to the statement about rents (in the case of rents, rents, which, in 1995, represented 17,4 % of private final consumption expenditure in Germany compared with 4,7 % in Portugal, revealed a the price index for Portuguese Portugal was 78 % lower than that of Germanyprice index whiprice index whi), the Commission can assure the Honourable Member that the statistics are, of course, the product of meticulous and independent work carried out by the Instituto Nacional de Estatistica for the Portuguese statistics and the Statistisches Bundesamt for the German statistics.

In short, in order to obtain the aforementioned statistics, the Commission used the data supplied by the national statistical institutes of Portugal and Germany on rents.

With regard to rents as a proportion of private final consumption expenditure, the Commission used the data transmitted by the two institutes in September 1996.

The Commission has no reason to doubt the reliability of the data supplied by the Instituto Nacional de Estatistica and the Statistisches Bundesamt, which are the result of the sort of meticulous and independent work called for by both the Honourable Member and the Commission.

(1) OJ C 303 E, 24.10.2000, p. 170.