Why is Scandinavia so expensive? | CNBC Explains

Why is Scandinavia so expensive? | CNBC Explains


Tak! Across Scandinavia, the average price
of everything from a knitted roll neck to pastries from the local bakery are
some of the highest in the world. Scandinavia is a region in northern Europe
that was historically made up of three kingdoms: Norway, Sweden, and Denmark. They’re united by their Viking heritage
but also their shared reputation as one of the most expensive
regions to live and visit. Whether it’s buying a car or a TV,
consumers in Scandinavia pay some of the highest
prices in the world. Even buying groceries is costly with all
three countries’ food and drink prices above the European average. All three countries also have
a standard VAT rate of 25%. Amongst all the European nations,
only Hungary has a higher rate. Heading to the bar is also pretty pricey. In Norway, having a beer or glass of wine
will cost 2.5 times the EU average. Both Norway and Sweden have state-run monopolies
on alcohol which helps keep the prices up. This social market model, rather than
a liberal market model like in the U.S., is common across Scandinavia and helps
explain why the cost of living is so high. Scandinavian countries have large welfare
states with their social expenditures, as a percentage of GDP, among the highest in
the world and this requires high levels of taxation. Sweden has a top rate of
personal income tax of over 60%, while Denmark’s is more than 55%, both of
which are well above the OECD average. In Denmark, if you want to buy
a car you have to pay anywhere between 85% and 150% tax on
top of the cost of the vehicle. And the taxes don’t stop there. Let’s say I want to buy
a sweater in Denmark. I pay 300 kronor for it, but how much of that
money actually goes to the vendor? Well, first there’s the 25% VAT –
leaving the seller with 240 kronor. The clothes shop also has to pay a
minimum 22% of corporate income tax. That means that a big portion of the money I paid
for my sweater goes to the Danish government. Not to mention there’s a hefty
payroll tax on employees’ wages and the store still has to pay for rent, electricity,
and cleaning – all of which are taxed, too. These taxes mean that for
Scandinavian businesses to make a profit, they need to charge their
consumers high prices. For some companies, this has proved too
much of a burden for their business model. The world’s biggest furniture company
IKEA was founded in Sweden but has moved its headquarters
to the Netherlands. Through corporate restructuring, the business is
now owned by a non-profit Dutch parent company. In part due to the high taxes in Sweden. But according to some experts,
Scandinavia’s social democrat tendencies have led to a strong social cohesion and
has helped provide political stability. This, in turn, has made their economies safe
havens for outside investors – which is one reason why the Danish, Swedish and
Norwegian currencies called krona are so strong. This can be tough on tourists with the
exchange rate doing them no favors. If the cost of living in
Scandinavia is so expensive, why then are its citizens some
of the happiest in the world? In the past five years, Scandinavian countries
have regularly topped the World Happiness Report. That’s an index that measures overall life
satisfaction based on different contributing factors. Some experts attribute these high satisfaction
levels with Scandinavia’s large welfare state which they say ensures financial security,
job security, and economic distribution. In return for high taxes, citizens get free
state education, very cheap child care, a functioning public transport
and a free health service. But a large and expensive social welfare
state doesn’t necessarily mean the best. For example, Norway is the only
Scandinavian country that ranks in the top 10 for adult education
levels, amongst OECD countries. And yet Scandinavians remain
happy with the status quo, living within a social corporatist economy
that provides reliable economic welfare. Having a beer at the end of the day does
cost a small fortune, but for people living and working in Scandinavia, high prices
provide a quality of life that’s worth paying for. Hi guys, thanks very much for watching. If you’d like to see any more of our
Explainers, then check out these. Otherwise, feel free to comment below the video
for any future videos you’d like us to make. And don’t forget to like and subscribe. Tak for watching!

100 Comments on "Why is Scandinavia so expensive? | CNBC Explains"


  1. Sweden: Female Cops Told to Submit to Islamic State or Be Raped
    https://nyheteridag.se/blev-omhandertagen-av-kvinnliga-poliser-vet-ni-vad-is-gor-med-horor-som-ni/
    https://www.breitbart.com/europe/2019/07/04/convicted-man-urged-swedish-female-cops-submit-isis-be-raped/
    2 July 2019

    Reply

  2. Sweden: Female Cops Told to Submit to Islamic State or Be Raped
    https://nyheteridag.se/blev-omhandertagen-av-kvinnliga-poliser-vet-ni-vad-is-gor-med-horor-som-ni/
    https://www.breitbart.com/europe/2019/07/04/convicted-man-urged-swedish-female-cops-submit-isis-be-raped/
    2 July 2019

    Reply

  3. I recently visited all three countries. They are expensive and boring, but yes, very scenic with nice old buildings. Maybe they are "happy", but I sure wasn't while I was there. I am happy to be back in Canada, where I can eat my fill and have a couple of the World's best beers without going bankrupt.

    Reply

  4. One thing not mentioned, is, that the Scandinavian countries have low negotiation power, due to small populations.
    Denmark 5,8 million
    Sweden 10,2 million
    Norway 5,3 million

    It's much easier for German Aldi to negotiate good deals on fruit from let's say Spain, due to a big population (83 million), than for the Danish Aldi.
    Yes, the Scandinavian countries often have high taxes on unhealthy stuff, like sugar, sweet, alcohol, cigarettes etc. But many things have no taxes, except for the VAT. But VAT is very similar across Europe.

    Moving further north to Iceland (300K pop.), the distance of course also have an effect. And let's not even go to Greenland (55K pop.).

    Moving to the US., things like electronics are way cheaper, than in, say Europe. I'm not sure why, but is probably also because of a huge population (327 million). The same electronic part in the US, often costs 30-50% less, than in Europe. It doesn't matter if it is American produced, or if comes from Asia.

    Reply

  5. I love nordic countries my friend broke her knee while we were hiking. We needed to call an helicopter to pick her up and bring her to hospital. Guess how much the helicopter ride, doctor meeting and a surgery cost? In grand total 0€.

    Reply

  6. In India,you need to pay 250% Tax for a SuperCar…
    Lamborghini costs the same price as that of Bugatti in other countries 😂.

    Reply

  7. I think one of the things I like the most about Europe is that you are not obligated to tip the server at a restaurant. I still tip a little bit over here, but not like in the U.S. where you are rushed to eat and then expected to give a 15-20% tip because the restaurant owners don't want to pay the servers.

    Reply

  8. I have to pay for ur healthcare and education for ur children..

    Fuckk these useless shitty law….

    Reply

  9. Well if you can live a good life why bother, we pay high for the best. If you aren't getting what you're paying for you are being scammed just like my country

    Reply

  10. Soon it will be a welfare nation which will only benefit the poor and illegals. Muslims will distribute the wealth among themselves and extended family overseas. 🤣

    Reply

  11. I read all these arguments about why the scandinavian model does or does not work. But here's the thing. If it truly did not work. Why the actual fuck do you think it has the happiest countries in the world. We don't complain, because it ain't fucking broken. Have a nice daym

    Reply

  12. People like to be dominated by a state, they like to have a more powerful leader "taking care" of their lives. Less freedom but more happiness.

    Reply

  13. Scandinavian countries might be Tourist unfriendly but it certainly is Immigrant friendly especially if you are from the Islamic Religion because you can be 5 % of the population of these lands but can enjoy 40 % of its Social Welfare Benefits not mention go Scott free after every human rights violations of Rape, Robbery and Murder thanks to a loving Government that enjoys importing the wrong people into their land.
    If you Scandinavians are desperate to dig your own grave nobody can help you oh by the way if you are athesis and Socialist then it won't last long once Islam runs you over you will be humiliated and terrorised in your own homes and streets.
    Could have given refuge to Tibetan Buddhist at least they are very peaceful, hardworking and respectful of the country that gives them refuge unlike the sadistic Islamic pigs that will destroy you soon.

    Reply

  14. Most people can't afford to eat out or buy a house. So you cook at home and live in 3-6 story apartment buildings. Also buying a car is expensive so everyone bicycles to the train station. For lunch you eat rye bread with a couple of slices of cucumber or potato or something else. Food is expensive in the stores, so you have to be on a diet all the time. They do have a propensity to drink a lot of beer, so a beer belly is quite the norm.

    Reply

  15. So far I have been only at Denmark, Copenhagen….2 times. And yeah it is expensive, but is so beautiful and calming. Everything has its order. Am looking forward to visit Sweden and Norway.

    Reply

  16. High Prices & Taxes BUT worth it, OK? so what do these people do for work or what is their minimum Wage? and the people on welfare how much do they get?

    Reply

  17. And those free healthcare, child support, pensions, are now open to millions of refugees from middle east.

    Reply

  18. The info is not correct. Most supermarket prices are below both Nicaragua and Thailand, and many many other nations. Otherwise very expensive, yes.

    Reply

  19. Given fact: Beer is expensive in Scandinavia. Solution: Do a shitty Viking raid onto a German supermarket. On sale it's about 40 centsUS/litre. UPADATE: There is always some beer on sale in Deutschland.

    Reply

  20. lol one of happiest. Every swede I’ve talk to in the last 5 years living here. Most Complain all the time, taxes to high, medical care cost a fortune, government run booze. Plus Swedes keep a lot to them selves and don’t say much to the government. So how you got that figure I’ll never no. Plus the rising crime rate is a real issue. Trust me they are not as happy as suggested. It’s like the American show I watched claimed the average wage for a swede was 35k a month. Lol that’s not even close. 22k to 25k would of been more accurate. Plenty of fake news about Sweden.

    Reply

  21. Asama47815673 It’s not because of taxes though. It’s because Scandinavians earn way more. Let’s say a Scandinavian were to go on a holiday to America, they’d be rich.
    But if an American would go to Scandinavia, everything would seem expensive to them.

    Reply

  22. Ikea is still owned by the sons of the founder, they just own the parent company in the Netherlands

    Reply

  23. I have purchased big bottle of red wine in Lagos Portugal for 1,5 euros, I have eaten open buffet dinner with fish, chicken, meat and wide variety of veggies, salads, desserts Saoa Joao 4 star hotel in Alvor Portugal, Algarve for 10 euros per person. It was wonderful to live and reside at affordable Algarve region after visiting pricey but very orderly and modern Barcelona, Valencia regions of Spain with only chinese open buffet meals for 13 euros with 6 plates of various food products. Cucumber tastes are very nice and at highest grade compared to world cucumbers, very delicious. I wish to live in Algarve region of Portugal or in Barcelona , Girona region after visiting those countries in 2018, 2019 years for total of 35 nights in 16 seaside cities , with my wife. 500 cl Beer is always 2 -3 euros in Portugal's cafes, bars.

    Reply

  24. I wonder if they are so happy as it has been claimed, why there is a vast majority of men heading to southern/asians countries? And most importantly, "Happiness" is an abstract concept, happy in what exactly? In southern countries maybe there isn't the best welfare in the world but that doesn't determine happiness at all. People in many southern countries enjoy life deeply, with sun, beaches, clubs and always having a smile on. Good walfare and order are not strictly Synonyms of happiness. Actually i been in contact with Swedes and i can tell that they admires a lot more southern european life style.

    Reply

  25. I don't know if 42 cent for a beer is fortune in Canada, but her in Denmark, it isen't. bottle beer is often cheaper then bottled water.

    Reply

  26. because your money doesn't only go to the person who sells what you buy, but also to the government who will then give it to people just because they exist

    Reply

  27. So happy for this country. In the Philippines our taxes goes mostly to our corrupt leaders. and our salary is low. But living here is costly too. And the traffic is the worst of the worst.

    Reply

  28. That is a little too much taxes, and the SCAMdinavia countries that are apart of the Euro zone, means the banks do not even offer you interest rates to save your money.

    Reply

  29. Isn't it weird that people like Dutch, German and Scandinavians are so uncommon in Britain, yet always seem so familiar once they get to know you? (I know they can be common sometimes, but not as predictable to meet as Irish, Scottish, Polish, Spanish, French, Italian, Romanian, etc.) Not that I have anything against it, but they all just seem so common everywhere in comparison.

    Reply

  30. The reason is because people from Scandinavia such as Finland describe happiness differently. So if you ask them that they dont think of it the way americans do. They have a much better way of viewing the world so their less depressed and anxiety is less aswell

    Reply

  31. In my opinion; Scandinavian countries (Also Finland) are the epitome of European society, and the peak of human civilization! Their way if life should be followed in the rest of the world.

    Very blessed are the people who are born here.

    Reply

  32. Germany is spending its pension funds, which Germans paid for, on migrants. Sweden’s naivety wont last another 10 years

    Reply

  33. Also if you want to run a successful welfare state you cant import more people than you put to work. Take lessons from Sweden.

    Reply

  34. Well, thats why we have a fair medical insurance for everyone. Not only for the wealthy ones. Like US

    Reply

  35. Beautiful country but thank. Goodness I don't live there. I thought living in Los Angeles was expensive!

    Reply

  36. Regarding the happiness of the Swedish people, there's an old saying you can't miss what you don't have you can't miss what you never had or experience. And that's what makes them happy.

    Reply

  37. Many fail to realize the difference between visiting and living in a country. As a foreigner to visit Scandinavia for instance will cost you a lot, but not so much to live considering you're still being paid under their system. Now if you want to live and work in Paris for example, it will require some deep pockets to purchase an apartment even for someone from Scandinavia.

    Reply

  38. Greeting from Tokyo, Japan. Just want to say that Im absolutely LOVE the Scandinavian.countries, esp. Sweden !!💙💙💙
    And for the record, I actually DON'T think the Scandinavian countries are too expensive. They are a bit pricey, but still affordable.

    Reply

  39. When the US starts working like a scandanavian country I'll concider moving back 😅 keeping that citizenship for such occasion. In the mean time I'll just live the dream traveling and living in a cheap country, yay dual citizenship (just wish I had a European citizenship too 😂)

    Reply

  40. Everyone works. Not much welfare. Muslims told children as young 2 years old must be in the daycare and both parents must work, in Scandinavian countries.

    Reply

  41. Most home decoration is very minimal and they are not very materialistic. Americans materialistic lifestyle supports the health of the world economies. You cannot compare small countries with huge countries like America that are as large as Europe and have many very large cities. Americans would have to live in small houses like they did in the forties fifties and sixties. A more simple lifestyle. This is why I staying home and being cozy is important to them they cannot afford to go out. They spend a lot of outside time enjoying nature. If our economy is like that the rest of the world's economies would tank. But that's okay. Maybe we will all have a better quality of life and enjoy the simple things in life.

    Reply

  42. Party because of this the all of the forrest in Sweden belongs to us citizens. So thats a great perk.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *