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Common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination

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Common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination

Purchasing Power Parities (PPPs) allow a volume comparison of gross domestic product (GDP) and its aggregates between the Member States of the European Union (EU). In order to improve the transparency and quality of the entire process of PPP production, this Regulation is intended to set up a legal framework for the calculation of PPPs within the national statistical institutes and in the Statistical Office of the European Union (Eurostat).

ACT

Regulation (EC) No 1445/2007 of the European Parliament and of the Council of 11 December 2007 establishing common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination.

SUMMARY

Purchasing Power Parities (PPP) take account of differences in price levels between Member States, thereby allowing a direct comparison to be made between the volume of their gross domestic product (GDP). This Regulation creates a legal framework for the sustainable development, production and dissemination of PPPs.

Roles and responsibilities

Eurostat's tasks include collecting information from the Member States for the calculation of PPPs, coordinating the supply of basic information , calculating and publishing PPPs, and developing and communicating methodology, in consultation with the Member States. Eurostat calculates PPPs each calendar year.

The Regulation sets out the method which Member States must follow to collect the basic data. The survey results and basic information are certified by the Member States and sent to the Commission.

Published results

The results published by the Commission for each Member State include at least the following:

  • PPPs at the level of GDP;
  • PPPs for private household consumption expenditure and actual individual consumption;
  • price level indices relative to the Community average;
  • GDP, private household consumption expenditure and actual individual consumption and respective per capita figures in purchasing power standard (PPS ).

Use of PPPs

PPPs are used to calculate:

  • the sums allocated by the Structural Funds and the Cohesion Fund; national per capita GDPs deflated by PPPs are used to draw up the list of regions eligible for Structural Funds assistance and to determine the amount of funding allocated to each region;
  • the correction coefficients to be applied to the remuneration and pensions of officials and other servants of the European Communities (EC) in accordance with the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the EC.

Financing

The Commission provides a financial contribution covering up to 70% of the costs incurred by Member States which are eligible under the rules on grants.

REFERENCES

Act

Entry into force

Deadline for transposition in the Member States

Journal

Regulation (EC) No 1445/2007

9.1.2008

-

OJ L 336, 20.12.2007

RELATED ACTS

Commission Regulation (EU) No 193/2011 implementing Regulation (EC) No 1445/2007 of the European Parliament and of the Council as regards the system of quality control used for Purchasing Power Parities

This Regulation defines the common quality criteria and the structure of the quality reports concerning Purchasing Power Parities.

Regulation (EC) No 1059/2003 of the European Parliament and of the Council of 26 May 2003 on the establishment of a common classification of territorial units for statistics (NUTS) [Official Journal L 154, 21.6.2003].

The EU has introduced a legal framework for the geographical division of the territory of the European Union in order to harmonise the collection, transmission and publication of national and Community statistics.

See consolidated version

Regulation (EC) No 223/2009 of the European Parliament and of the Council on European statistics and repealing Regulation (EC, Euratom) No 1101/2008 of the European Parliament and of the Council on the transmission of data subject to statistical confidentiality to the Statistical Office of the European Communities, Council Regulation (EC) No 322/97 on Community Statistics, and Council Decision 89/382/EEC, Euratom establishing a Committee on the Statistical Programmes of the European Communities [OJ L 87, 31.3.2009].

Council Regulation (EC) No 2223/96 on the European system of national and regional accounts in the Community [Official Journal L 310, 30.11.1996].

The purpose of this Regulation is to ensure the provision of comparable, up-to-date and reliable information on the structure of the economies of the EU Member States and their regions and developments in their economic situation.

Amended by Regulation (EC) No 715/2010 [Official Journal L 210, 11.8.2010].

Council Regulation (EEC) No 696/93 on the statistical units for the observation and analysis of the production system in the Community [Official Journal L 76, 30.3.1993]. See consolidated version

REPORT

Report from the Commission to the European Parliament and the Council on the implementation of Regulation (EC) No 1445/2007 of the European Parliament and of the Council of 11 December 2007 establishing common rules for the provision of basic information on Purchasing Power Parities and for the calculation and dissemination. - [ COM(2013) 420 final of 17.6.2013 - not published in the Official Journal]

The report summarises the state of implementation of the Regulation and various developments since its adoption. It proposes a revision of the regulatory framework for PPPs to reflect those developments, as well as to align it with the Lisbon Treaty. Its main findings are as follows:

  • Transmission of basic data: all EU Member States and EFTA countries comply fully with the requirements. Montenegro and the two Western Balkan countries that are potential candidate countries are medium to highly compliant with the requirements. The main weaknesses identified for these countries lie in the provision of detailed national accounts data.
  • Calculation and dissemination of PPPs: Eurostat calculates and disseminates PPPs on an annual basis, going beyond the minimum requirements of the Regulation.
  • Methodological manual: the first version of the Eurostat-OECD Methodological Manual on Purchasing Power Parities was published in 2006. In 2012, it was completely revised and fully updated to reflect the most recent methodology.
  • Quality control: the Regulation introduced a formal process of quality control into the PPP programme. All countries provided a structured set of documentation on their sources and methods for the collection and provision of basic data. Eurostat started formal assessments of Member States’ practices in 2011 after a period in which countries drafted their Inventories. By the end of 2012, 10 countries had been visited and assessed.
  • Financing: PPPs are fundamentally international statistics and have limited national purposes. Member States therefore receive a financial contribution from the Commission (a maximum of 70% of the costs eligible under the Commission’s grant rules). The Commission proposes maintaining this support, which is necessary to ensure the sustainability of the PPP programme.

The report states that the Regulation needs to be adapted to take into account the entry into force of the Lisbon Treaty. In particular, the comitology articles need to be reviewed to bring them into line with new procedures.

Last updated: 03.03.2014

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