Archive:Government expenditure by sub-sector of general government

Data extracted on 28 February 2012

In the European Union (EU-27) as well as Iceland, Norway and Switzerland, the compilation of government revenue and expenditure data is well established by reference to the European System of Accounts (ESA95). This article focuses on the relative importance of the sub-sectors of general government, i.e. central government, state government, local government and social security funds, in total expenditure of general government. Total expenditure is examined at sub-sector level both at aggregate level as well as looking at the predominant nature of transactions in each sub-sector and the development of the weight of the sub-sectors over time.

Table, Figure or Map X: Full title of the Table, Figure or Map - Source: Eurostat (educ_ilang)

Main statistical findings

In 2010 in the European Union, total expenditure at general government level made up 50.6% of GDP. Central government accounted for 38.5% of general government total expenditure (TE) or 18.8% of GDP, when transfers to other subsectors of general government are consolidated (please see methodological note). State government made up 5.7% of TE or 4.0% of GDP, local government accounted for 24.3% of TE and 11.9% of GDP, with social security funds making up the remainder – 31.5% of TE or 16.0% of GDP (figure 1 and table 1).

Share of sub-sectors in total expenditure varies among countries

Figure 1 shows that the importance of sub-sectors varies across countries. In the EU-27, central government is the most important sub-sector in terms of its expenditure. In five countries, expenditure and revenue for a state or regional level is distinguished – this concerns the three regions in Belgium, the Bundesländer in Germany and Austria, the comunidades autónomas in Spain and the Kantone in Switzerland.

In three countries – Malta, the United Kingdom and Norway – the sub-sector social security funds is not separated from central government data.

In Ireland, Greece, Cyprus and Malta local government accounted for less than 10% of general government expenditure in 2010, with central government accounting for by far the largest part of expenditure in three of the four countries.

In Greece – as in Germany and France – the social security funds sub-sector has a share of more than 40% of total general government expenditure in 2010. For all three countries, the share of the social security funds shows no particular increase due to the economic crisis. A high share of local government is observed in Denmark (63% of TE in 2010), Sweden (48%), Finland (40%), Norway and Poland (both 33%), and Italy (31%).

For the countries that do report state government data, the importance of this sub-sector tends to be relatively high. In 2010 the share in total expenditure ranged between 17% in Austria and 37% in Switzerland. Conversely the smallest shares of central government can also be found among these federally structured countries. Central government accounted for 14% of general government expenditure in Switzerland, 20% in Germany and Spain and 23% in Belgium.

Social transfers make up the largest transaction in government expenditure

Figure 2 immediately makes visible the importance of social transfers (social benefits and social transfers in kind, D.6COPAY) in general government expenditure and the predominant role of social security funds in ensuring this distributive role of government. Indeed, the majority of social security funds expenditure is classified into this transaction, with the only other notable expenditure in this sub-sector being 'intermediate consumption' (P.2) and compensation of employees (D.1PAY) – both could be characterised as 'operating costs'. Nevertheless, another large share of social transfers is distributed by central government.

The largest share of 'operating costs' – 'intermediate consumption' and 'compensation of employees' is incurred by central and local government – these are also the two most important transactions for state government. A large part of 'compensation of employees' when classified by function (COFOG) is attributed to the divisions 'education' and 'health' – together accounting for around half of this transaction's expenditure. For state government, the division 'education' on its own makes up around half of the total cost of employees, reflecting the state or regional responsibility for education in all of the concerned countries.

'Gross capital formation and acquisitions less disposals of non-financial non-produced assets' (P.5_K.2), which essentially covers physical investments, are mainly undertaken at the level of local government (57%), with central government also being important (32%).

From figure 2 it can also be seen that transfers within general government mainly come from central government and add a sizable amount to central governments' total expenditure, not taken into account in this publication.

Data sources and availability

Context

Further Eurostat information

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Government statistics (t_gov)

Annual government finance statistics (t_gov_a)

Government deficit and debt (t_gov_dd)

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Government statistics (gov)

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Government deficit and debt (gov_dd)

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Methodology / Metadata

General government expenditure by function (COFOG) (ESMS metadata file - gov_a_exp_esms)
Government deficit and debt (ESMS metadata file - gov_dd_esms)
Government revenue, expenditure and main aggregates (ESMS metadata file - gov_a_main_esms)
Quarterly financial accounts for general government (ESMS metadata file - gov_q_ggfa_esms)
Quarterly government debt (ESMS metadata file - gov_q_ggdebt_esms)
Quarterly non-financial accounts for general government (ESMS metadata file - gov_q_ggnfa_esms)
Structure of government debt (ESMS metadata file - gov_dd_sgd_esms)

Other information

Source data for tables and figures (MS Excel)

Government expenditure by sub-sector of general government: tables and figures