Government expenditure on economic affairs - Statistics Explained
    

Government expenditure on economic affairs


Data extracted in March 2018. Most recent data: Further Eurostat information, Main tables and Database. Planned article update: March 2019.

This article analyses data on general government expenditure on 'economic affairs' (according to the Classification of the Functions of Government - COFOG). It is part of a set of statistical articles based on Government expenditure by function.

Eurostat collects data on general government expenditure by economic function according to the international Classification of the Functions of Government (COFOG) in the framework of the European System of National Accounts (ESA2010).

Figure 1: Total general government expenditure on economic affairs, 2016 (% of GDP) - Source: Eurostat (gov_10a_exp), see country codes
Table 1: Total general government expenditure on economic affairs, 2016 (% of GDP and % of total expenditure) - Source: Eurostat (gov_10a_exp), see country codes

Main statistical findings

Expenditure on 'economic affairs'

As regards government expenditure on economic affairs at the level of the reporting countries, there is considerable variation over time as the amounts recorded may be influenced by operations of an extraordinary nature, such as disposal of non-financial non-produced assets recorded as negative expenditure, capital injections recorded as capital transfers, notably benefiting financial institutions and other categories of capital expenditures such as guarantee calls.

In 2016 in the EU-28, total expenditure of general government on 'economic affairs' was 4.0 % of GDP, a slight decrease in comparison to 2015 (4.2% of GDP) , however masking considerable variations at the level of the Member States. Among total expenditure on 'economic affairs', expenditure on 'transport' amounted to 1.9 % of GDP, expenditure on 'general economic, commercial and labour affairs' made up 0.9 % of GDP, research and development related to economic affairs made up 0.4 % of GDP, 'fuel and energy' made up 0.3 % of GDP, 'agriculture, forestry and fishing' and 'other industries' both made up 0.2% of GDP, 'mining, manufacturing and construction' and expenditure not elsewhere classified both made up 0.1 % of GDP, while communication made up less than 0.05 % of GDP.

In the EU, a large part of expenditure on agriculture, forestry and fisheries falls within the competency of the EU, meaning that expenditure of national governments in this group tends to be small in comparison with EFTA countries.

Capital injections into banks recorded as capital transfers explain the relatively high figures for some countries over the time period. Such expenditure is recorded in COFOG group 'general economic, commercial and labour affairs'.

For 2016, Belgium (3.4 % of GDP) reported the highest amount for 'general economic, commercial and labour affairs' as ratio to GDP, followed by Hungary (2.2 % of GDP) and France (2.0 % of GDP).

The importance of the 'economic affairs' division is furthermore highly dependant on the amount of subsidies given to public or private transportation companies and even more by the amount of expenditure of transport companies classified within the general government sector. In 2016, the highest expenditure to GDP ratios for 'transport' were recorded in Luxembourg (3.7 % of GDP), Hungary and the Czech Republic as well as Norway (all 3.5 % of GDP), and Slovakia (3.4 % of GDP).

Data sources and availability

Reporting of data to Eurostat

Annual government finance statistics (GFS) data are collected by Eurostat on the basis of the European System of Accounts (ESA2010) transmission programme. Member States are requested to transmit, among other tables, table 1100, 'Expenditure of general government by function' twelve months after the end of the reference period. Table 1100 provides information about expenditure of the general government sector divided into main COFOG functions and ESA2010 categories. The transmission of the COFOG I level breakdown (divisions) is compulsory for the years 1995 onwards, whereas information on the COFOG II level (COFOG groups) is provided on a compulsory basis for the reference years 2001 onwards. The main reference year used in this publication is 2016 as the latest year available for most countries.

Data was extracted on 8 March 2018.

Provisional data

Data for Spain (2016 only), France (2015-2016), the Netherlands (2016), Slovakia (COFOG level II only) are labelled provisional. Data for Portugal for 2014-2016 is labelled estimated.

Definition of general government and its subsectors

The data relate to the general government sector of the economy, as defined in ESA2010, paragraph 2.111: 'The general government sector (S.13) consists of institutional units which are non-market producers whose output is intended for individual and collective consumption, and are financed by compulsory payments made by units belonging to other sectors, and institutional units principally engaged in the redistribution of national income and wealth’.

Classification of functional expenditure of government

The Classification of the Functions of Government (COFOG) classifies government expenditure into ten main categories (divisions known as the 'COFOG I level' breakdown): general public services; defence; public order and safety; economic affairs; environmental protection; housing and community affairs; health; recreation, culture and religion; education; social protection. These divisions are further broken down into 'groups' (COFOG II level).

For 'economic affairs', the groups are

  • 'general economic, commercial and labour affairs',
  • 'agriculture, forestry, fishing and hunting',
  • 'fuel and energy',
  • 'mining, manufacturing and construction',
  • 'transport',
  • 'communication',
  • 'other industries',
  • 'R&D economic affairs',
  • 'economic affairs n.e.c.'

Further information is available in the Eurostat Manual on sources and methods for the compilation of COFOG Statistics.

COFOG level II data

The provision of COFOG level II data has become compulsory with the introduction of ESA2010. The development of COFOG level II data is not completed in many Member States and data needs to be looked at with this in consideration.

Satellite accounts

Administrative expenditure data is additionally collected in so-called satellite accounts. In general, the amount of expenditure recorded in satellite accounts is expected to exceed the expenditure recorded under the respective COFOG division. More details on the comparability of COFOG data with satellite accounts data can be found in the COFOG manual.

Definition of general government total expenditure

Government total expenditure is defined in ESA2010, paragraph 8.100 by using as reference a list of ESA2010 categories.

Government total expenditure comprises the following categories:

  • P.2, 'intermediate consumption': the purchase of goods and services by government;
  • P.5, 'gross capital formation' consists of: (a) gross fixed capital formation (P.51g); (b) changes in inventories (P.52); (c) acquisitions less disposals of valuables (P.53); where
  • P.51g, 'gross fixed capital formation': consists of acquisitions, less disposals, of fixed assets during a given period plus certain additions to the value of non-produced assets realised by the productive activity of producer or institutional units. Fixed assets are tangible or intangible assets produced as outputs from processes of production that are themselves used repeatedly, or continuously, in processes of production for more than one year;
  • D.1, 'compensation of employees': the wages of government employees plus non-wage costs such as social contributions;
  • D.29, 'other taxes on production, payable',
  • D.3, 'subsidies, payable',
  • D.4, 'property income, payable', consists of : (a) 'interest, payable' (D.41) and (b) 'other property income, payable' (D.42+D.43+D.44+D.45), where
  • D.41, 'interest': excludes settlements under swaps and forward rate arrangements, as these are treated as financial transactions in the ESA 95;
  • D.5, 'current taxes on income, wealth, etc, payable';
  • D.62, social payments: cover social benefits and pensions paid in cash;
  • D.632, 'social transfers in kind - purchased market production';
  • D.7, 'other current transfers, payable';
  • D.8, 'adjustments for the change in pension entitlements'
  • D.9, 'capital transfers payable'
  • NP, 'acquisitions less disposals of non-financial non-produced assets': public investment spending. Non-financial non-produced assets consist of land and other tangible non-produced assets that may be used in the production of goods and services, and intangible non-produced assets.
  • Capital investments includes P.5 and NP.
  • Other current expenditure includes D.7, D.29, D.5 and D.8.

Gross Domestic Product

Throughout this publication, nominal GDP, i.e. GDP at current prices is used.

Time of recording & symbol

In the ESA2010 system, recording is in principle on an accrual basis, that is, when ‘economic value is created, transformed or extinguished, or when claims and obligations arise, are transformed or are cancelled.'

":" not available

"p" provisional

"pp" percentage points

More data and information

For more country-specific notes, e.g. on missing data, please refer to the metadata published on Eurobase. The authors can be contacted at ESTAT-GFS@ec.europa.eu

Context

In the framework of the European System of National Accounts (ESA2010), Eurostat collects data on general government expenditure by economic function according to the international Classification of the Functions of Government (COFOG) – see methodological note.

See also

Further Eurostat information

Main tables

Government statistics (t_gov)
Annual government finance statistics (t_gov_10a)

Database

Government statistics (gov)
Government finance statistics (EDP and ESA2010) (gov_gfs10)
Annual government finance statistics (gov_10a)
Government revenue, expenditure and main aggregates (gov_10a_main)
General government expenditure by function (COFOG) (gov_10a_exp)
Main national accounts tax aggregates (gov_10a_tax_ag)

Dedicated section

Methodology / Metadata


Other information