Data extracted: May 2024.
Planned article update: September 2026.
Highlights
The main focus of the European Union’s (EU’s) cohesion policy is to help regions converge/catch-up. Many of the less-developed and transition regions in the EU are characterised as having relatively low-growth, low-income (primarily in eastern and southern EU countries) or pockets of poverty, social exclusion and/or industrial decline (regions that have been ‘left-behind’); these regions receive the bulk of the EU’s regional funds.
The COVID-19 crisis had a profound impact on the global economy. The latest data available for regional accounts concern 2021. The EU economy was starting to recover from the pandemic and its associated measures, supported by stimulus programmes, vaccine rollouts, the gradual easing of restrictions and a wave of delayed purchases. When analysing the information presented below it is important to note that during the initial stages of the pandemic in 2020 some countries – for example, Italy and Spain – experienced severe outbreaks, overwhelming their healthcare systems. Conversely, other regions, for example in northern or eastern EU countries had much lower infection rates. In 2021, this situation changed, with some of the highest COVID-19 infection rates concentrated across eastern EU countries.
This article forms part of Eurostat’s twin publications on Rural Europe and Urban Europe.
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(%, 2021)
Source: Eurostat (urt_10r_3gdp) and (urt_10r_3emp)
Gross domestic product (GDP)
As the central measure of national or regional accounts, gross domestic product (GDP) summarises the economic position of a country or a region. GDP at market prices in the EU was valued at €14.6 trillion in 2021, equivalent to an average of €32 680 per inhabitant. A majority (50.9%) of the EU’s GDP was concentrated in predominantly urban regions, while intermediate regions accounted for approximately a third (33.7%) and the smallest share (15.4%) was generated in predominantly rural regions.
Figure 1 shows the development of GDP in the EU between 2008 and 2021 based on the urban-rural typology; note the time series are based on data in current prices (and are therefore influenced by the effects of price inflation). The global financial and economic crisis led to a considerable fall in economic activity in 2009 across the EU, with a somewhat larger contraction in economic activity for intermediate and predominantly rural regions. Thereafter, economic activity rose every year before the COIVD-19 crisis: growth was relatively strong between 2009 and 2011 and then slowed considerably in 2012. Thereafter, growth accelerated most years through to 2019. In 2020, there was another economic shock, as the COVID-19 pandemic impacted economic activity, with the largest impact in predominantly urban regions and the smallest impact in predominantly rural regions. There was a strong rebound in economic activity in 2021. In current price terms, GDP in predominantly rural regions was some 35.7% higher in 2021 than in 2008, while overall growth was slightly less pronounced in predominantly urban regions (up 32.1%) and intermediate regions (up 30.7%).
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(index, 2008 = 100)
Source: Eurostat (urt_10r_3gdp)
As noted above, a majority (50.9%) of the EU’s GDP in 2021 was concentrated in predominantly urban regions. These regions are often viewed as being the motors of the EU economy, providing hubs for wealth creation and attracting large numbers of people as a result of the wide range of opportunities they offer in economic, educational or social/cultural spheres.
In 2021, there were 10 EU countries where more than half of all economic activity took place in predominantly urban regions; an additional 6 countries reported their highest share of GDP was derived in predominantly urban regions. Leaving aside the special case of Malta [1], the highest concentrations of GDP within predominantly urban regions were recorded in the Netherlands (78.6%), Estonia (67.6%) and Spain (66.6%).
By contrast, intermediate regions accounted for the highest share of GDP in 9 EU countries in 2021. Leaving aside Cyprus and Luxembourg, the highest concentrations of GDP within intermediate regions were observed in Lithuania (52.2%), Slovenia (52.1%) and Hungary (51.4%). There were just 2 EU countries where predominantly rural regions accounted for the highest share of GDP: Ireland (46.9%) and Romania (37.1%).
(% share of total GDP)
Source: Eurostat (urt_10r_3gdp)
GDP per inhabitant is often used as a proxy measure for evaluating overall living standards. Note that this measure doesn’t take account of externalities such as environmental sustainability or issues such as income distribution or social exclusion, which are increasingly seen as important drivers for sustainable development and the overall quality of life.
In order to compensate for price level differences across countries, GDP can be converted using conversion factors known as purchasing power parities (PPPs). The use of PPPs, rather than market exchange rates, results in data being denominated in an artificial common currency unit called a purchasing power standard (PPS). The use of PPS series, rather than euro-based series, tends to have a levelling effect, as countries with very high GDP per inhabitant in euro terms also tend to have relatively high price levels (for example, the cost of living in Luxembourg is much higher than the cost of living in Bulgaria).
In 2021, GDP per inhabitant in the EU was 40 500 PPS in predominantly urban regions, which was considerably higher than the corresponding ratios for intermediate regions (28 600 PPS) or predominantly rural regions (25 000 PPS). Based on this measure, economic activity per person in predominantly urban regions may, at least in some cases, be influenced/overstated. This is especially the case if a relatively high proportion of a region’s labour is composed of commuters from surrounding regions (net commuter inflows tend to increase GDP per inhabitant in regions where commuters are employed and decrease it in those regions where they are resident). This pattern is evident in many of the EU’s capital city regions that receive commuters from their surrounding region(s). A similar pattern exists across some national borders: for example, Luxembourg receives a high number of cross-border commuters from its 3 neighbouring countries.
Within the EU, the highest levels of GDP per inhabitant were usually recorded by predominantly urban regions. The only exception was Austria, where GDP per inhabitant in 2021 was marginally higher for intermediate regions (45 200 PPS) than it was for predominantly urban regions (44 300 PPS); see Figure 3.
In 2021, GDP per inhabitant in the EU’s predominantly urban regions was 1.6 times as high as in predominantly rural regions. Across the EU countries:
- in Romania, Hungary and Bulgaria, GDP per inhabitant for predominantly urban regions was more than 3.0 times as high as for predominantly rural regions;
- at the other end of the range, GDP per inhabitant for predominantly urban regions was no more than 1.35 times as high as for predominantly rural regions in Austria, Portugal, the Netherlands, Italy and Spain.
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Map 1 is based on regional GDP per inhabitant (adjusted for purchasing power and expressed as a percentage of the EU average). Between 2008 and 2021, there were 393 NUTS level 3 regions (out of a total of 1 166) where GDP per inhabitant in relation to the EU average rose at least 5 percentage points, as shown by the darkest shades in the map). There were 341 regions where GDP per inhabitant remained relatively stable, and 432 regions where it fell at a relatively fast pace in relation to the EU average (down more than 5 points; as shown by the lightest shades in the map).
A more detailed picture based on the urban-rural typology reveals that a majority of the predominantly rural regions in the EU reported an increase in GDP per inhabitant (relative to the EU average); this ratio rose at a fast pace (upwards of 5 points) in 170 regions, while it was stable in 129 and fell at a rapid pace in 113. The situation was relatively balanced for intermediate regions, as there were 173 regions where GDP per inhabitant rose at a fast pace and 189 where it fell at a fast pace. GDP per inhabitant fell at a rapid pace in more than half (130 regions) of the predominantly urban regions of the EU, while it rose at a fast pace in 50 and was relatively stable in 61. Note however that many of the EU’s major cities – including 14 capital cities – were among the 50 predominantly urban regions where GDP per inhabitant increased at a rapid pace.
Between 2008 and 2021, the most rapid increases in GDP per inhabitant (relative to the EU average)
- among predominantly urban regions were recorded in the Irish capital region of Dublin, the German region of Mainz, Kreisfreie Stadt and the Romanian capital region of Bucureşti
- among intermediate regions were recorded in the German regions of Ingolstadt, Kreisfreie Stadt , Wolfsburg, Kreisfreie Stadt and Coburg, Kreisfreie Stadt
- among predominantly rural regions were recorded in the Irish regions of South-West and Mid-West and the Polish region of Płocki.
At the other end of the scale, the most rapid fall in GDP per inhabitant (relative to the EU average)
- among predominantly urban regions was recorded in the Greek capital region of Dytiki Attiki
- among intermediate regions was recorded in the Dutch region of Overig Groningen
- among predominantly rural regions was recorded in the Greek region of Andros, Thira, Kea, Milos, Mykonos, Naxos, Paros, Syros, Tinos.
Note: based on index with EU = 100. Germany, estimates. Spain, France and the Netherlands: provisional. Greece, Hungary, Malta, Poland and Romania, break in series.
Map 1: Overall change in GDP per inhabitant, by urban-rural typology, 2008–21
(by NUTS 3 regions)
Source: Eurostat (nama_10r_3gdp)
Gross value added
When calculated from the output side, the main component of GDP is gross value added. This is defined as output (at basic prices) minus intermediate consumption (at purchaser prices) and is the balancing item of the national accounts’ production account. Value added can be analysed according to the statistical classification of economic activities (NACE).
Figure 4 shows the structure of gross value added in the EU for the 3 categories of the urban-rural typology. Market services (defined here as NACE Sections G to N) accounted for the highest share of value added for all 3 categories within the urban-rural typology. The share of market services was particularly pronounced in predominantly urban regions, where it accounted for 58.0% of total value added in 2021. Unsurprisingly, agriculture, forestry and fishing (NACE Section A) had a relatively high share of total value added in predominantly rural regions (4.3% in 2021). It is interesting to note that, apart from agriculture, forestry and fishing, a relatively high share of economic activity in predominantly rural regions was accounted for by industry (28.0%) and by construction (6.7%).
_URE2024.png)
(% share of total value added)
Source: Eurostat (urt_10r_3gva)
Figure 5 shows the relative contribution made by 5 aggregated economic activities to total value added in 2021; the information is presented according to the urban-rural typology (use the dropdown list to change the category).
- In predominantly urban regions, market services accounted for more than half of total value added in each of the EU countries; non-market services had the 2nd highest share in 20 out of 24 countries, the exceptions being Czechia, Estonia, Ireland and Poland (where industry recorded the 2nd highest share).
- In Luxembourg, Cyprus and Slovenia, market services accounted for more than half of total value added in intermediate regions. Market services had the highest share (although less than 50%) of total value added in all but 1 of the remaining 22 EU countries; the exception was Ireland, where industry had the highest share and market services the 2nd highest share. Industry had the 2nd highest share of total value added in 13 countries, while non-market services had the 2nd highest share in the remaining 11 countries.
- More than three fifths (61.5%) of the total value added generated in predominantly rural regions of Ireland was accounted for by industry. Ireland hosts a number of the world’s top technology and pharmaceutical companies with a strong presence of multinational enterprises. Their high levels of value added may be atypically high, for example if assets (such as technology patents) are domiciled in a region. In Ireland, Bulgaria and Czechia, the highest share of total value added was generated by industry, while market services had the highest share in the remaining 21 EU countries.
(%)
Source: Eurostat (urt_10r_3gva)
Employment
National accounts employment estimates measure the overall level of employment in an economy as well as providing information by economic activity. In 2021, there were 209.6 million people employed in the EU. The highest numbers were employed in predominantly urban regions (93.6 million; 44.6% of the total), followed by intermediate regions (76.8 million; 36.6%) and predominantly rural regions (39.2 million; 18.7%).
While predominantly urban regions accounted for more than half (50.9%) of the EU’s GDP in 2021 (see Figure 2), their share of employment was lower (44.6%), indicating that they had higher than average apparent labour productivity. By contrast, intermediate regions and predominantly rural regions had higher shares of employment (than their shares of GDP) and consequently had below average apparent labour productivity.
There was a mixed pattern among the EU countries in terms of how employment was distributed based on the urban-rural typology. Focusing on the 22 countries for which there are data covering all 3 categories in the urban-rural typology, the following key points can be noted.
- There were 9 countries where predominantly urban regions recorded the highest share of people employed in 2021. In 3 of these – the Netherlands, Spain and Belgium – more than half of the workforce was employed in a predominantly urban region, with this share peaking at 75.6% in the Netherlands.
- There were 8 countries where intermediate regions recorded the highest share of people employed in 2021. In 4 of these – Bulgaria, Lithuania, Hungary and Czechia – at least half of the workforce was employed in an intermediate region, with this share peaking at 59.8% in Bulgaria.
- There were 5 countries where predominantly rural regions recorded the highest share of people employed in 2021. In 2 of these – Ireland and Romania – more than half of the workforce was employed in a predominantly rural region, with this share peaking at 55.1% in Ireland.
(% share of total employment)
Source: Eurostat (urt_10r_3emp)
Between 2020 and 2021, the number of employed people in predominantly urban regions rose by 1.7% across the EU, which was higher than the rates recorded for either intermediate regions or predominantly rural regions (both 1.3%); see Figure 7.
Across the 22 EU countries which have data for all 3 categories of the urban-rural typology
- there were 13 that reported their fastest growth in employment for predominantly urban regions
- there were 4 where intermediate regions recorded the fastest employment growth
- there were 5 where predominantly rural regions recorded the highest employment growth.
In 2021, among EU countries, Ireland recorded the highest annual employment growth rate in predominantly rural regions (6.3%). Ireland also had the highest employment growth rate in intermediate regions (5.1%) and had the 2nd highest rate in predominantly urban regions (6.0%), just behind Bulgaria (6.2%). In 2021, employment grew for all 3 categories in the urban-rural typology within most EU countries which have data for all 3 categories; the exceptions were Germany and Lithuania (where there was no employment growth in predominantly rural regions) and Bulgaria, Czechia, Latvia, Hungary and Slovakia (where there was a decline in employment in at least one type of region).
Considering all EU countries, there were 3 EU countries where employment in predominantly urban regions fell between 2020 and 2021: Estonia (down 1.5%), Hungry (down 0.4%) and Slovakia (down 0.3%). The number of people employed in intermediate regions fell in 4 EU countries during the period under consideration: Latvia (down 5.4%), Bulgaria (down 2.0%), Slovakia (down 0.8%) and Czechia (down 0.4%). The same number of countries (4) reported falling employment in predominantly rural regions: Latvia (down 5.0%), Bulgaria (down 2.5%), Hungary (down 0.6%) and Slovakia (down 0.4%).
(%)
Source: Eurostat (urt_10r_3emp)
In 2021, some 153.4 million people were employed in various service activities across the EU; this was equivalent to almost three quarters (73.2%) of the total workforce. The highest concentration of services employment was recorded in predominantly urban regions, where services provided work to more than 4 out of every 5 employed people (81.5%). Lower shares were recorded in intermediate regions (69.1% of the workforce were employed in services) and predominantly rural regions (61.3%). By contrast, in predominantly rural regions a relatively high proportion of the workforce were employed in industry (19.6%) and in agriculture, forestry and fishing (11.2%).
_URE2024.png)
(% share of total employment)
Source: Eurostat (urt_10r_3emp)
Figure 9 shows the relative contribution made by 5 aggregated economic activities to total employment in 2021; the information is presented according to the urban-rural typology (use the dropdown list to change the category).
- In predominantly urban regions, market and non-market services accounted for more than 4 out of 5 employed people in a majority of EU countries, with their share peaking at 90.2% in Denmark; at the lower end of the range, services accounted for less than three quarters of employment in Czechia, Estonia and Poland.
- In intermediate regions, market services provided work to the largest share of employed people in all but 1 of the EU countries (the exception being Sweden, where non-market services employed a higher share). Non-market services were generally the 2nd largest employer, although in 6 eastern EU countries – Bulgaria, Czechia, Hungary, Poland, Romania and Slovakia – and in Portugal, a larger proportion of the workforce was employed in industry.
- In predominantly rural regions, the share of people employed within agriculture, forestry and fishing varied considerably between EU countries. Shares of less than 4.0% were recorded in the Netherlands, Slovakia, Belgium and Germany (which had the lowest share, at 2.8%), while shares of more than 10.0% were registered in 10 EU countries, reaching peaks of 29.9% in Bulgaria and 30.1% in Romania.
(%)
Source: Eurostat (urt_10r_3emp)
Source data for tables and graphs
Context
In July 2019, the European Commission identified 6 priorities for the period 2019–24, including 3 with a direct impact on the economy: A European Green Deal, A Europe fit for the digital age and An economy that works for people.
The COVID-19 crisis severely disrupted the output of goods and services as well as international trade. Lockdowns closed many plants, with disturbances to trading routes and high shipping costs. There were also difficulties around the supply of strategic items used in industrial supply chains such as the manufacture of motor vehicles and electronics. As the impact of the pandemic dissipated, the attention of policymakers and economists (re)turned to a number of longer-term, structural challenges: public finances, population ageing, climate change, security of energy supply, sustainable development, weak productivity growth, rising income and wealth inequality, or territorial disparities within and among EU countries.
In December 2020, a multiannual financial framework covering the period 2021–27 was adopted. This provides a budget aimed at kick-starting the EU economy. The plan was reinforced by an emergency European Recovery Instrument (also known as Next Generation EU) to facilitate decisive responses to the most urgent challenges, such as the COVID-19 crisis.
The EU’s regional and cohesion policy supports a broad range of socioeconomic priorities by focusing on 5 investment priorities. The introduction of this online publication provides more information about cohesion policy.
Notes
- ↑ Note: 2 EU countries – Cyprus and Luxembourg – are composed of single NUTS level 3 regions. This explains why all the GDP of Cyprus and Luxembourg is assigned to a single degree of urbanisation, in both cases to intermediate regions. While Malta has 2 NUTS level 3 regions, both are predominantly urban regions.
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- Eurostat regional yearbook – 2024 edition
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External links
European Commission – Directorate-General Agriculture and rural development
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Legislation
Statistical legislation
- National accounts – legislation
- Regulation (EU) 2017/2391 of the European Parliament and of the Council of 12 December 2017 amending Regulation (EC) No 1059/2003 as regards the territorial typologies (Tercet)
- Consolidated and amended version of Regulation (EC) No 1059/2003 of the European Parliament and of the Council on the establishment of a common classification of territorial units for statistics (NUTS)
Policy legislation
- Commission Delegated Regulation (EU) No 522/2014 of 11 March 2014 supplementing Regulation (EU) No 1301/2013 of the European Parliament and of the Council with regard to the detailed rules concerning the principles for the selection and management of innovative actions in the area of sustainable urban development to be supported by the European Regional Development Fund
- Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD)
- Regulation (EU) No 1310/2013 of the European Parliament and of the Council of 17 December 2013 laying down certain transitional provisions on support for rural development by the European Agricultural Fund for Rural Development (EAFRD)