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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 Communities (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.

Key terms used in the act
  • PPPs: spatial deflators and currency converters which eliminate the effects of the differences in price levels between countries, thus allowing volume comparisons of GDP components and comparisons of price levels.
  • Basic information: the data needed to calculate and guarantee the quality of PPPs. A detailed list is set out in Annex 1 to the Regulation.
  • PPS: the artificial common reference currency unit used in the European Union to express the volume of economic aggregates for the purpose of spatial comparisons in such a way that price level differences between countries are eliminated.

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

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 of 11 March 2009 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 of 25 June 1996 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 of 15 March 1993 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

Last updated: 02.11.2010
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