Poland and Portugal Lead Europe in Household Income Growth as Spain Tops Major Economies

Poland and Portugal recorded the strongest real household income growth in Europe over the past two years, while Spain emerged as the best performer among the continent’s major economies, according to new OECD-based data tracking living standards across 16 countries.

Unlike gross domestic product, which measures overall economic output, real household income per capita reflects the actual purchasing power available to households after inflation. It offers a clearer picture of how economic growth translates into day-to-day financial wellbeing.

The latest figures show that 14 of the 16 European countries surveyed posted gains in 2025 compared with 2024, while two registered declines. However, the pace of growth slowed overall across the region, reflecting weaker economic momentum and persistent inflationary pressures.

Poland led Europe with real household income growth of 4.1% in 2025, extending its position as the strongest performer for a second consecutive year. The OECD said rising employee compensation offset lower social benefits, helping drive sustained income gains.

Portugal followed with a 2% increase, while the Netherlands posted 2.3%. Denmark, Greece and Spain also recorded solid growth ranging from 1.5% to 1.9%. In Greece, higher wages and increased property income supported gains, aided by unemployment falling to its lowest level since 2009.

Belgium, Hungary and Sweden each saw growth above 1%, reflecting steady labour market conditions and modest improvements in earnings.

Among larger economies, Spain led with 1.5% growth, outperforming peers such as Germany, the United Kingdom and Italy. Germany recorded a modest 0.6% increase, while the UK posted 0.7% growth, supported by rising wages, social benefits and lower taxes on income and wealth in the final quarter of the year.

Italy matched the OECD average at 0.8%, though its quarterly data showed volatility, including a decline in late 2025 driven by inflation and weaker property income.

France recorded only marginal growth of 0.2%, reflecting subdued economic conditions.

Finland and Austria were the only countries to see declines in real household income per capita. Finland fell 0.7%, weighed down by slow economic growth, rising unemployment and reductions in public spending. Austria saw a sharper drop of 1.8%, reversing strong gains from the previous year.

Across the OECD, average real household income growth slowed to 0.8% in 2025, down from 2.1% in 2024. The slowdown was broad-based, with only a handful of countries improving on their previous year’s performance.

Belgium and Denmark recorded the largest accelerations, while Austria experienced the steepest reversal, shifting from 3.6% growth in 2024 to contraction in 2025.

The data highlights widening differences across Europe, with eastern and southern economies outperforming many of their larger western counterparts in translating economic activity into household gains.