Government expenditure on defence

Data extracted in February 2023

Planned article update: 28 February 2024

Highlights

General government expenditure in the EU on defence amounted to 1.3 % of GDP in 2021.

Total general government expenditure on defence, 2021 (% of GDP) - Source: Eurostat (gov_10a_exp)

This article analyses data on general government expenditure on 'defence' (according to the Classification of the Functions of Government - COFOG). It is part of a set of statistical articles based on general 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 (ESA 2010).

In 2021, 'defence' expenditure amounted to 1.3 % of GDP both for the EU and the euro area.

Full article

Expenditure on 'defence'

In 2021, 'defence' expenditure amounted to 1.3 % of GDP both for the EU and the euro area, with expenditure in both areas being relatively stable in the period 2013-2021 (fluctuating between 1.2 and 1.3 % of GDP), but decreasing as a ratio to GDP compared to 1995 and 1996 (1.6 % of GDP).

As a share of total expenditure, 'defence' expenditure amounted to 2.5 % in 2021 in the EU and 2.4 % in the euro area.

In 2021, the highest levels of total expenditure on defence in the EU and EFTA countries were observed in Greece (2.8 % of GDP), Latvia (2.3 % of GDP) and Estonia (2.0 % of GDP), Romania (1.9 % of GDP), France, Cyprus and Lithuania (all 1.8 % of GDP). Norway reported 1.7 % of GDP. In contrast, Ireland (0.2 % of GDP), Luxembourg (0.4 % of GDP) as well as Malta and Austria (both 0.6 % of GDP) had comparatively low expenditure on defence in the EU. Iceland reported the lowest level of expenditure on defence, as it does not have a standing army (0.1 % of GDP).

Table 1: Total general government expenditure on defence, 2021 (% of GDP) - Source: Eurostat (gov_10a_exp), see country codes

At the level of the EU, the major part of 'defence' expenditure is concentrated in the COFOG group 'military defence' (1.1 % of GDP in 2020). 'Civil defence', 'R&D defence' and defence expenditure not elsewhere classified together amounted to less than 0.1 % of GDP at the level of the EU, while 'foreign military aid' accounted for 0.1 % of GDP in 2021. Research and development on defence made up a negligible part of government expenditure in all countries except France (0.1 % of GDP). 'Foreign military aid' amounted to 0.1 % of GDP for the EU, with notable amounts in Germany, Spain, France, Italy, Cyprus, Luxembourg and Sweden (all at 0.1 % of GDP).

Expenditure on 'defence' by type of transaction

At the level of the EU, a bit less than half (47.2 %) of total expenditure on 'defence' in 2021 was devoted to 'compensation of employees', that is wages and salaries as well as employers' actual or imputed social contributions. 28.0 % was devoted to 'intermediate consumption', consisting of government purchases of goods and services, except where these are regarded as capital formation. 21.6 % of defence expenditure related to capital investments in 2020, such as the purchase of new equipment.

Evolution of 'defence' expenditure over 1995-2021

At the level of the EU, decreases in 'defence' expenditure as a percentage of GDP were noted over 1995-2021 (from 1.6 % of GDP in 1995 to 1.3 % of GDP in 2021), with the share in total expenditure dropping from 3.1 % in 1995 to 2.5 % in 2021.

Source data for tables and graphs

The detailed tables are available here.

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 (ESA 2010) 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 ESA 2010 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 2021 as the latest year available at EU level.

Data was extracted on 22 February 2023.

Provisional data

While a significant effort was undertaken to harmonise the recording of government measures to mitigate the economic and social impact of the COVID-19 pandemic, a full harmonisation of data for the reference years 2020 and 2021 was not yet achieved. The likelihood of future revisions is thus higher than usual and EU and euro area data is provisional for 2021.

Data for the EU and euro area aggregates (2021), Germany (2019-2021), Spain (2021), France (2020-2021) and Portugal (2021) is provisional.

Definition of general government and its subsectors

The data relate to the general government sector of the economy, as defined in ESA 2010, 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 'defence', the groups are

'military defence',
'civil defence',
'foreign military aid',
'R&D defence',
'defence 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 at general government level has become compulsory with the introduction of ESA 2010.

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.

In particular, as regards defence expenditure, COFOG division 'defence' cannot be easily compared with NATO measures of defence expenditure. The main reasons are: COFOG is a classification by main purpose implying that some expenditure within COFOG 'public order and safety' might be counted under NATO methodology; the treatment of pensions in COFOG is within division 'social protection' and the COFOG treatment of employers' social contributions follows ESA 2010 and the time of recording may be different.

Definition of general government total expenditure

Government total expenditure is defined in ESA 2010, paragraph 8.100 by using as reference a list of ESA 2010 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 2010;
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.29, D.5 and D.8.

Gross Domestic Product

Throughout this publication, the nominal GDP, i.e. GDP at current prices is used. The latest GDP available at time of publication is used.

Time of recording & symbol

In the ESA 2010 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

"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 (ESA 2010), Eurostat collects data on general government expenditure by economic function according to the international Classification of the Functions of Government (COFOG) – see methodological note.