Using data from the International Monetary Fund, we had compared the rise in the cost of living, based on projected figures taken in January 2021 and May 2022, across these select countries and the UK.
Here’s what it revealed about the UK compared to the rest of Europe:
To view our dataset in full, click here.
The graph below shows how much household energy prices have risen since before the energy crisis, alongside the increase in cost of living in these select countries.
Together we can see how much the rise in energy prices has impacted the cost of living.
1. Estonia | Electricity: +323% | Gas: +559%
2. Netherlands | Electricity: +421% | Gas: +328%
3. Italy | Electricity: +211% | Gas: +329%
4. Austria | Electricity: +145% | Gas: +433%
5. Denmark | Electricity: +161% | Gas: +353%
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In the list below, alongside monthly data provided by the Household Energy Price Index (HEPI), we’ve examined the energy crisis in the 5 countries with the highest energy price increases compared to pre-crisis levels. In most cases, these countries have recently experienced record high energy prices as the European winter sets in.
Key to these crisis-levels are wholesale price increases which enforce suppliers to pass on extra costs to consumers, i.e. households. These consistently increasing wholesale prices come as a result of multiple compounding factors, at play since the second half of 2021. Unreliable weather conditions, post-COVID economic recovery, mounting energy insecurity and limited storage supplies in various regions across Europe brought in the crisis.
Since Russia began its war in Ukraine in February 2022, Russia has withdrawn from the European energy market. This accelerated the pre-existing crisis since Russia supplied 45% of gas imports to the EU in 2021, nearly 40% of its total gas consumption, or 155 billion cubic metres.
Without the security of Russian gas, many countries in Europe must rapidly diversify their supply and upscale production from other sources.
Extremely high energy prices in Estonia come as the result of an over-reliance on volatile wholesale markets. This is due to scarce gas storage across the Baltics, continuous nuclear power plant maintenance, and limited capacity for domestic electricity generation.
In September 2022, Estonia hit new record high prices for both electricity, which rose to €0.59 per kilowatt-hour (KWh), and for natural gas, which rose to €0.38/KWh. Since early 2021 to September 2022, the price for electricity and natural gas rose 353% and a staggering 773% respectively.
Between September and October 2022, electricity and gas prices had decreased by 22% and 25% respectively. This light relief can be attributed to the Estonian government’s compensation scheme which subsidises 80% of the price increases that go above €80/MWh for electricity and gas, available to all households. With that being said, since the first half of 2021 to October 2022, prices of electricity and gas rose 323% and 559% respectively.
In October 2022, Estonia’s household gas prices, at €0.29/KWh, were 43% higher than the European average (taken across these 22 sample countries). Household electricity prices, at €0.47/KWh, were 17% higher than this European average.
The Netherlands have experienced especially high energy price climbs since it relied on Russian imports for nearly 50% of its gross available energy. This over-reliance was the result of slowing domestic gas production in an attempt to transition from fossil fuels in response to fracking related earthquakes.
In October 2022, the Netherlands household prices for electricity were the third highest in Europe at €0.67/KWh, 52% higher compared to the European average. Household gas prices were the highest in Europe, at €0.42/KWh. This is 78% higher compared to the European average price for gas.
These prices represent new records for both electricity and gas in the Netherlands, first reached in September 2022 with no recorded change in prices into October. Compared to the first half of 2021, this represented a 421% increase in the price of electricity, and a 338% increase in the price of gas.
The Dutch government introduced a price cap from January 2023, freezing the price of electricity at €0.40/KWh, and freezing gas prices at €1.45 per cubic metre. Until then, prices were expected to continue rising, although the government had began to compensate households with €190 per month until the price cap came into effect.
Electricity prices in Italy rose 30% between September and October 2022 to the second highest prices for household electricity in Europe, the highest when adjusted to purchasing power standards (PPS), at €0.70 KW/h. Whereas, the price of gas rose to €0.30/KWh, a whole 97% to the fourth highest position in Europe (third highest when adjusted to PPS).
These prices represent new record highs for the country in both cases. Compared to the European average, the price for electricity and gas sit 39% and 84% higher respectively.
These records come in spite of various measures by the government to reduce or cut energy-related taxes. However, as yet there have been no measures to cap energy prices in retail or wholesale markets, meaning household prices are subject to rise around 60% in the coming months.
The HEPI also reported that gas distribution charges in Italy also increased in October 2022. What’s more, Russia also suspended its gas supply to Italy in October due to operator conflicts with Austria, where the pipeline passes through. These latest developments resulted in a 211% increase in the household price of electricity and a 329% increase in the price of gas since the first half of 2021.
In October 2022, energy prices for electricity and gas both rose 24% to new record highs in Austria, to €0.54/KWh and €0.34/KWh respectively. The HEPI attributes part of these rise to energy-related tax increases.
This represents a 145% rise in the cost of electricity compared to pre-crisis levels, and 433% rise in the cost of gas. This results in the third highest gas prices in Europe (sixth highest when adjusted to PPS).
Compared to European average recorded in this study, Austria’s electricity and gas prices sit higher by 39% and 84% respectively. These increases are reportedly the result of limited market offers and increased supplier rates as they adjust to volatile wholesale prices.
In response, the Austrian government implemented an electricity price cap at €0.10/KWh for households with an annual consumption of up to 2,900KWh. Anything above this capped price fell under a cap of €0.40/KWh.
Electricity prices in Denmark rose to the highest in Europe (fourth highest when adjusted to PPS) to €0.76/KWh. This 15% increase into October 2022 is a new record high for the country. Gas rose only 1% to €0.41/KWh, also reaching new records nevertheless. Therefore, Danish gas prices were the second highest in Europe (fourth highest when adjusted to PPS).
As well as increases in the volatile wholesale energy market, distribution charges also increased which helps account for these prices. As such, Danish electricity and gas prices were respectively 64% and 75% higher than the European average.
As such, compared to the first half of 2021, electricity and gas prices had increased 161% and 353% respectively. To combat these rising costs, the Danish government enforced a price cap on surplus heat to €12.50/GJ from January 2023.
Using data from the International Monetary Fund, the following table compares key cost of living data between the UK and the European average (25 countries).
Difference in cost of living between the UK and Europe
|Cost of living increase (percent of total household spending)||11.5%||6%|
|Cost of living difference between high and low income households (percent share of household income)||69%||25%|
Households on the lowest incomes in the UK are disproportionately affected by cost of living increases, compared to those on high-incomes in the UK and compared with European average, based on projected figures taken in January 2021 and May 2022.
Part of the reason for this is because the UK housing stock is among some of the most poorly insulated across Europe. Research has found that the average UK home will lose heat 5 times faster than buildings in Germany, and that the most poorly insulated homes will pay £1,000 more to heat in 2022.
Despite only receiving 4% of its gas imports from Russia in 2021, the UK’s energy prices are greatly affected by international markets, which provide around 50% of the country’s gas supply. Overall, gas provides heating to nearly 80% of homes in the UK, as well as accounting for 40% of electricity production.
The Energy Price Guarantee was enforced in October 2022 to combat rising wholesale costs. The EPG reduces the cost of electricity and gas per KWh so that the typical UK household pays around £2,500 a year, on average. The scheme ran until April 2022.
Excluding energy-related taxes and standing charges, the price for electricity and gas in the UK had risen 21% and 31% respectively, under the EPG. Prior to the EPG, the price of electricity and gas had risen 62% and 79%, compared to the first half of 2021.
According to the House of Commons Library, despite the reduced costs under the EPG, households will still be paying 96% more on their electricity bill, and 141% more on their gas bill, compared to the price cap set in the winter 2021/2022, including energy-related taxes and standing charges.
We’ve gathered the following data from select countries across Europe to demonstrate the impacts of the energy crisis and subsequent cost-of-living crisis: