Why Scandinavia will blow a hole in your pocket

Why is Scandinavia so expensive?
Why is Scandinavia so expensive?

Scandinavia is one of the most beautiful regions in Europe. For many, it is on their list of summer holiday destinations.

But before you book your dream getaway, pause for thought — whether it's the hotel or eating in a restaurant, you'll likely be paying some of the highest prices in the world.

So why are Norway, Sweden and Denmark (historically, the three kingdoms of Scandinavia) so expensive to visit?

The currency

Before you start buying your Danish pastries, you'll need to exchange your dollars or pounds into the local currency, krona.

Scandinavian economies have become safe havens for outside investors, which in part has helped the Danish, Swedish and Norwegian krona become very strong, doing tourists no favors.

VAT rates

Even buying groceries is costly, with all three countries' food and drink prices above the European average.

That's because all three have a 25 percent VAT rate on all purchased goods. Among all the European nations, only Hungary has a higher rate.

State-run monopolies on alcohol

Chances are you're going to want to have a drink or two (or three), but beware of buying booze in Scandinavia.

In Norway, having a beer or glass of wine will cost two-and-a-half times the EU average.

Both Norway and Sweden have state-run monopolies on alcohol, which helps keep the prices up.