Britain joins Europe's poor relations

Britain has slipped down Europe's wealth league and by the end of next year only Spain, Greece and Portugal will be poorer.

According to unpublished economic forecasts prepared by the European Commission, Britain has now been overtaken by the Irish Republic, officially one of the European Union's "poor four" - and will experience a further decline in income per head during 1998.

The projections are for Gross Domestic Product, or income per head, the yardstick used by its planners to gauge how much cash member states are entitled to claim from Europe's multibillion pound regional grant aid funds. Britain's GDP per head was 4 per cent below the EU average at the end of last year, having fallen steadily from 99 per cent of the average in 1993. The Commission's projection is for a further decline from 96.3 per cent to 96 per cent between 1997 and 1998.

By the end of 1998, Ireland will have moved up to take Austria's place as seventh richest EU state, while Britain's GDP per capita continues to fall. Ireland, which is categorised for EU regional aid purposes as "objective one" and therefore entitled to top rates of assistance, will see income per head rise to 6 per cent above the EU average thanks to a growth and jobs boom which shows no sign of abating.

The figures for Britain reflect huge disparities in the distribution of wealth and the widening gap between the UK's rich and poor. Greater London and much of the South-east, for example, enjoy a GDP per capita significantly above average and rank among the richest regions in the EU. Merseyside and the Scottish Highlands and Islands by contrast already qualify for maximum rates of regional funding from Brussels because income per head falls below 75 per cent of the EU average.

Monika Wulf Mathies, the EU commissioner for regional policy, last night attacked the British government's failure to ensure a better distribution of wealth among the UK's regions. "The over-reliance on market forces and deregulation is leading to an increasing gap between rich and poor in Britain," she said. Britain is receiving almost pounds 14bn in financial aid from the EU structural funds under a 1989 to 1999 funding cycle. She said pumping more European money into the poorest UK regions was not the answer: "The problem of poverty and long-term unemployment has to be addressed chiefly by national policy. It is up to the British government to shoulder its national responsibility."

The Commission is extremely critical of the government's handling of regional funding, which they claim is so slow and inefficient as to discourage private investment in the poorer regions.

Luxemburgers will remain the EU's wealthiest citizens according to the forecasts. But the Greeks, despite receiving billions in regional aid cash, have failed to narrow the gap and remain at the bottom of the pile.

The wealth league

1 Luxembourg

2 Denmark

3 Belgium

4 Germany

5 The Netherlands

6 France

7 Austria

8 Ireland

9 Finland

10 Sweden

11 Britain

12 Spain

13 Portugal

14 Greece