Is Life in Europe More Expensive Than in Ukraine? A Comparison of Expenses for Basic Goods and Services

Taxes are the first deduction from wages. Every European employee pays personal income tax (PIT) and social contributions into the state budget. These contributions consist of pension, health, insurance, and other payments, through which the government provides social support. Most European countries use a progressive tax system, where people with higher incomes pay taxes at higher rates. Therefore, in Figure 1 we used the tax rates corresponding to the average salary.

After taxes, a significant share of household spending goes to housing — that is, rent or mortgage payments and utilities (see Figure 2). Since the 1980s, housing costs in European countries have risen sharply. For example, in France in 1980 the rent for a one-bedroom apartment was 1,000-2,000 French francs, while in 2024 it was EUR 1,720, or 11,280 francs (since 1999 the exchange rate has been FRF 6.56 per EUR 1). In other words, rental prices have increased five- to tenfold, whereas consumer prices overall have risen 3.7 times.

This surge in housing costs has hit young people and the middle class especially hard. In January 2025, for example, 63% of Britons noted that obtaining housing was very difficult for young people, and 23% said it was difficult. The average rent for an apartment in London has already exceeded the average net income, so members of the middle class cannot afford a comfortable life in the capital. Although the situation is much better in other cities, housing and utilities remain the largest component of household expenses in most European countries (see Figure 6).

The best housing situation is in Montenegro, Albania, and Turkey, where rent accounts for 10-13% of total consumer spending, while in Ukraine it is twice as high, at 20%. As shown in Figure 2, Ukraine ranks eighth from the bottom for capital city rents: slightly more expensive than in Estonia and Bulgaria, but cheaper than in most other countries.

For most Europeans, utility bills are among the main household expenses, especially in winter. Gas is cheapest in the Balkans and Eastern Europe, including Ukraine (see Figure 3). Naturally, in southern European countries total heating costs are lower thanks to milder seasons, while in northern countries they are higher.

Another major household expense is electricity (see Figure 4). Household electricity prices vary significantly across countries depending on the source of generation. For example, green energy is usually the most expensive. Governments typically subsidize green producers and shift the associated costs to households, either fully or partially. Therefore, it is not surprising that electricity is the costliest in Germany — the highest in all of Europe. Overall, in countries where gas is expensive, electricity is also pricier.

As we can see from the charts above, Ukrainians spend relatively less on housing and utilities. However, as shown in Figure 5, more than 50% of household spending in Ukraine goes to food. Over the past two years, food prices have increased and now amount to about 85% of the European average.

As a rule, residents of wealthier countries spend relatively less on food and clothing and relatively more on services. In addition to housing maintenance, these services include education and healthcare, transportation, entertainment and so on.

So, although incomes in Ukraine are much lower than in the rest of Europe, expenses are also significantly lower: from taxes to housing and energy. Even so, Ukrainians devote a large share of their total spending to essentials, with less than 10% going to education and leisure.