By Kirstie McDermott
With prices rising globally, many workers have found their wages aren’t keeping up.
The European Commission added to concerns in its summer economic forecast, predicting that “a persistent feedback loop between wages and inflation is unlikely to develop” as surging energy prices “remain the main inflation driver”.
That’s not great news if you live in an expensive economy like Denmark.
Danish consumer prices are the highest in the EU, closely followed by those in Ireland, which are a huge 40 per cent higher than the average across the bloc.
Sweden, Finland and Luxembourg are traditionally known for high costs of living as well. But Sweden, for example, offsets this for citizens by providing a wide variety of well-funded public services, such as healthcare, education and welfare.
The downside of great public services can be higher taxes, more expensive housing costs and a higher bill at the supermarket or for entertainment.
So, for workers who want to benefit from the advantages of living in the EU, but would prefer to keep a little more cash in their pockets, which countries are the most affordable?
We’ve rounded up three of the best options.
Portugal: Start-ups in the sunshine
A hugely popular tourist destination, endless beaches and warm weather make Portugal a country we love for holidays. The Algarve region in the south gets around 3,000 hours of sun – the equivalent to 300 days – each year, making it one of the sunniest regions in Europe.
Increasingly though, Europeans are moving to Lisbon to work.
The Portuguese capital has become a destination of choice as its tech hub status has solidified over the past 10 years, attracting talent, inward investment as well as birthing a wealth of start-ups of its own. Plus, English is widely spoken as a second language.
Local startup names to know include multilingual translation service Unbabel, crypto wallet Utrust and Virtuleap, which uses virtual reality to improve brain health.
Big Tech also has a presence here – Amazon, Google, IBM, Fujitsu and Cisco Systems are some of the top companies with offices in Lisbon.
When it comes to day-to-day living, Lisbon is more expensive than anywhere else in the country, being the capital and the centre of the tech scene.
It’s also pricier than it was a few years ago, but this is relative. For example, consumer prices including rent are 41 per cent lower than in London, according to Numbeo.
Taxation is favourable too, as the country is seeking to attract talent. Non-habitual tax residents benefit from the non-habitual residence (NHR) tax regime, introduced in 2009, which gives tax breaks to individuals in their first ten years residing in the country.
Effectively, those moving to Portugal to work pay a flat rate of 20 per cent, compared to the current highest income tax band paid by locals of 48 per cent tax on income.
Bulgaria: A rising star in the Balkans
A Balkan country, Bulgaria joined the EU in 2007. While it hasn’t yet adopted the euro (the currency here is the Bulgarian lev), it is an affordable place to live with good weather – the country as a whole enjoys warm summers and mild winters.
When it comes to where to lay your cap, the capital city of Sofia is where foreign workers flock.
Located in the west of the country, Sofia has close proximity to Serbia and Romania and onwards into central and southern Europe. Since the nation joined the EU, its economy has been on the rise.
“Bulgaria has undergone a significant transformation over the past three decades, moving from a highly centralised, planned economy to an open, market-based, upper-middle-income economy,” according to The World Bank.
These days, Sofia enjoys good and affordable public transport, including an underground service, trams and regular buses, which connect most parts of the city, and the tech scene is booming.
In 2021, the city was ranked 20 out of 80 locations in the fDi’s Tech Cities of the Future report, underwriting its rising importance internationally.
The tech sector is one of Sofia’s fastest-growing, and Sofia Invest’s 2020 report shows that the city is a major ICT centre, with more than 50,000 people employed.
So, if you want to live and work in Bulgaria, how much will it cost you? Numbeo indicates that as a comparison, consumer prices including rent in Sofia are 50 per cent lower than in Paris.
Any downsides? While Bulgaria may be an attractive and affordable choice for foreign workers, language could be a barrier for some. Only around a quarter of the country’s population speaks English, but this is higher in tourist areas and in Sofia.
Spain: An old favourite with variety
A longstanding and much beloved relocation destination for foreign workers, the tourist parts of coastal Spain are where many Europeans often flock to for work.
But there are so many other locations within this vast country that offer huge opportunities for those looking to relocate.
Madrid, Barcelona and Valencia are the country’s three largest cities and well established centres for finance, tech and industry, as well as popular locations for those looking to set up shop.
The “smart city” of Santander in the north of Spain is a location that foreign knowledge workers in particular may look at with interest.
Located in the Cantabria region on Spain’s northern coast, it’s not far from the bigger cultural and foodie hubs of Bilbao and San Sebastian. With a population of around 180,000, Santander is a small city, but one that was at the forefront of the smart city revolution.
There are 12,000 sensors buried under the streets, on lamps and on city buses, which measure air pollution, count free parking spaces, monitor rubbish bins and dim lighting.
Since 2010, the city has also actively participated in research projects across Europe and Asia, with more than 350 institutions and companies at a national and international level.
That’s all attractive to technology companies, and top firms in the region include professional services firms Deloitte and Accenture as well as Microsoft. Local heroes include Eolas Prints, a manufacturer of 3D printer filaments.
Compact though it may be, Santander is a city that offers a way of life that is affordable for workers. Prices here, including rent, are around 36 per cent lower than in Berlin, for example.