For years, Ukraine and Moldova have vied for the dubious honour of being the poorest country in Europe. The contest was close enough to be largely academic and they regularly traded last and second to last places for years. That symmetry is over. The average Moldovan today earns approximately 1.5 times more in dollar terms than the average Ukrainian. Ukraine is now officially the poorest country in Europe.

As recently as 2021, the two neighbours had nearly identical income levels — two small, post-Soviet economies stuck at the bottom of the European table, each struggling with corruption, emigration and the chronic underinvestment that comes with geopolitical limbo. Indeed, in the early years following the Maidan revolution in 2014, an influx of investment lubricated with a dollop of optimism even saw Ukrainian wages grow and start to close the gap with the much richer and more prosperous Russia.

Since then economic chaos and political instability has now given way to full scale war, the destruction of infrastructure, the displacement of millions of working-age citizens. Private investment has collapsed and hollowed out an economy that, before February 2022, had shown genuine signs of modernisation.

Moldova's relative rise is not a story of transformation. Chisinau remains poor by any European measure, and its own challenges — Russian energy dependence, a shrinking population, the unresolved frozen conflict in Transnistria — have not disappeared. Indeed, Moldova's economic situation is so dire that President Maria Sandu has even suggested reunifying with Romania, with which Moldova has close historical ties.

The demographic dimension compounds the economic one. Ukraine has lost millions of people to emigration since the invasion — many of them young, educated and unlikely to return quickly regardless of how the war ends. Ukraine has the worst demographics in the world with mortality three-times higher than fertility. And the drain on labour caused by the forced conscription of any man of military age that has not fled the country has led to a slow strangulation of industry. The tax base shrinks, the labour force thins, and the fiscal dependence on foreign aid for fully half the budget has already sent debt to GDP to over 100% and rising.

For European policymakers watching from Brussels, the income reversal is a data point that sharpens an already difficult question: what does post-war Ukrainian recovery actually look like, at what cost, and who will pay for it? The €90bn support package the EU has mobilised addresses the immediate financing gap. But two thirds of that money is earmarked for defence spending and the rest is for wages. Nothing significant is being spent on reconstruction; what is being spent is rebuilding energy assets destroyed by Russian missiles last winter.