Archive:Evolution of government expenditure by function

General government expenditure by economic function - EU-27 expenditure on social protection stood at 19.9% of GDP in 2012

Statistics in focus x/2014; Authors: Laurent FREYSSON, Martim ASSUNÇÃO, Michele MAROTTA, Laura WAHRIG
ISSN:2314-9647 Catalogue number:KS-SF-14-0xx-EN-N

This publication analyses global trends in the structure of general government expenditure breakdown by their main socio-economic function (according to the Classification of the Functions of Government - COFOG), with a focus on social protection expenditure.

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 (ESA95).

Main statistical findings

In 2012, EU-27 general government expenditure amounted to 49.4 % of GDP. Based on the latest available expenditure data by economic function for 2012, more than half was devoted to the functions ‘social protection’ and ‘health’, which accounted for 19.9 % and 7.3 % respectively of GDP. The other functions of government spending with a large share of government expenditure are ‘general public services’ (6.7 % of GDP), ‘education’ (5.3 % of GDP) and ‘economic affairs’ (4.1 % of GDP).

EU-27 general government expenditure at 49.4 % of EU GDP in 2012

General government expenditure amounted to around EUR 6 380 billion in 2012 in the EU-27 or 49.4 % of GDP.

As a ratio to GDP in 2012, the highest levels of government expenditure were found in Denmark (59.4 % of GDP), France (56.6 % of GDP), Finland (56.7 % of GDP) and Belgium (55.0 % of GDP), while the lowest levels were found in Bulgaria (35.9 % of GDP), Lithuania (36.1 & of GDP), Latvia (36.5 % of GDP) and Romania (36.7 % of GDP). Switzerland (34.1 % of GDP) recorded the lowest level among all reporting EU and EFTA countries.

All EU Member States which joined the EU in 2004 or after, continued to record a level of total general government expenditure below the EU average in 2012. Among the EU Member States, which joined the EU prior to 2004, Ireland, Luxembourg and Germany had the lowest proportion at 42.6 %, 44.3% and 44.7% of GDP respectively.

General government expenditure by function

In the EU as a whole, as well as in all EU and EFTA countries reporting data, ‘social protection’ is the most important function of government expenditure. In 2012, governmental social protection expenditure in the EU-28 was equivalent to 19.9 % of GDP (see Figure 1), 0.3 % percentage points more than in 2011.

The next most important functions in terms of government expenditure were ‘health’ and ‘general public services’, amounting to 7.3 % and 6.7 % respectively of GDP in the EU-28 in 2012. ‘Education’ (5.3 % of GDP) and ‘economic affairs’ (4.1 % of GDP) followed. The remaining functions – composed of ‘defence’, ‘public order and safety’, ‘environmental protection’, ‘housing and community amenities’ and ‘recreation, culture and religion’- represented altogether 6.1 % of EU-28 GDP in 2012.

The figures at EU level mask disparate situations in the Member states. For instance the highest spending on social protection reach 25.2 % of GDP in Denmark, 24.8 % in Finland and 24.2 % in France whereas the ratio is below 14 % in several of the most recent Member States. Other particular cases are Greece and Cyprus for which expenditure related to 'general public services' is significantly higher than in the other countries, notably due to the payment of interest to service debt and also to the relatively large size of central public services. It is also in Greece and in the UK where we find the highest share of public expenditure in the defence function (respectively 2.4% and 2.3 % of GDP versus 1.5 for EU-28). As regards government expenditure on economic affairs, there is sometimes considerable variation over time as the amounts recorded may be influenced by operations of an extraordinary nature, such as reclassification of public companies into the general government sector, sale of UMTS (mobile phone) licences or capital injections into banks. In particular, the latter two operations substantially explain the relatively high figures recently found for Spain and Belgium.

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[[Category:<Government statistics>|Evolution of government expenditure by function]] [[Category:<Statistical article>|Evolution of government expenditure by function]]