The FINANCIAL — In 2014, total general government expenditure amounted to €6 701 bn in the European Union1 (EU). This represented almost half (48.1%) of EU GDP in 2014, compared with 48.6% in 2013. In the euro area, the share stood at 49.0% in 2014 (49.4% in 2013). Among EU Member States, general government expenditure varied in 2014 from less than 35% of GDP in Lithuania and Romania to more than 57% in Finland, France and Denmark.
A detailed breakdown of general government expenditure by main functions2 is available for 2013. In the EU, the function ‘social protection’ was by far the most important, accounting for 40.2% of total general government expenditure. The next most important areas in terms of general government expenditure were ‘health’ (14.8%), ‘general public services’ such as external affairs and public debt transactions (14.1%), ‘education’ (10.3%) and ‘economic affairs’ (8.8%). The functions ‘public order and safety’ (3.7%), ‘defence’ (2.9%), ‘recreation, culture and religion’ (2.2%), ‘environmental protection’ (1.7%) and ‘housing and community amenities’ (1.4%) had more limited weights. This data at EU level mask however significant differences between the EU Member States regarding both the share and the ranking of each function of general government expenditure, according to EU.
Largest decreases of general government expenditure relative to GDP in Greece and Slovenia
In 2014, total general government expenditure accounted for more than half of GDP in eight EU Member States, with the highest shares being recorded in Finland (58.7%), France (57.2%) and Denmark (57.0%). Conversely, total general government expenditure represented less than 40% of GDP in six Member States: Lithuania and Romania (both 34.9%), Latvia (36.9%), Estonia (38.8%), Ireland (39.0%) and Bulgaria (39.2%).
In 2014, the ratio of general government expenditure to GDP decreased in a majority of EU Member States compared with 2013. The highest increase in the ratio of general government expenditure to GDP was recorded by far in Cyprus4 (+7.7 percentage points between 2013 and 2014), followed by Malta (+1.6 pp), and Austria (+1.4 pp). In contrast, significant decreases were registered in Greece4 (-10.7 pp) and Slovenia4 (-9.9 pp). Total general government expenditure as percentage of GDP dropped at EU level by 0.5 pp in 2014 compared with 2013, and by 0.4 pp in the euro area.
Share of social protection expenditure related to old age highest in Italy
In all EU Member States, social protection represented the most important area of general government expenditure. Its weight varied across EU Member States from 28.6% of total general government expenditure in Cyprus to 44.4% in Luxembourg. Eight EU Member States devoted more than 40% of their expenditure to social protection.
Social protection expenditure can be further broken down into nine detailed groups. The group ‘old age’, which includes pensions, made up the largest part of social protection expenditure in all EU Member States. More than a quarter of total general government expenditure was devoted in 2013 to old age in Italy (27.6%), Bulgaria (25.9%), Luxembourg (25.8%), Austria (25.3%) and Romania (25.1%). ‘Old age’ accounted for 21.4% of total general government expenditure in the EU, and for 22.0% in the euro area.
The group ‘sickness and disability’ represented a notable share in the Netherlands (10.1% of total general government expenditure in 2013), Croatia (9.5%) and Denmark (9.0%), while the share of ‘family and children’ related expenditure was highest in Denmark (8.8% of total general government expenditure) and Luxembourg (8.0%). Expenditure for ‘unemployment’ was highest in Ireland (7.6% of total general government expenditure), followed by Spain (6.7%), Denmark (5.9%), Belgium, Germany and the Netherlands (all 4.3%).
Slovakia with highest share of government health expenditure, Greece for economic affairs
Member States differ somewhat in the second most important area of general government expenditure. Expenditure related to health came second in eleven EU Member States: Slovakia (health accounted for 18.3% of total general government expenditure in 2013), the Netherlands (17.7%), the Czech Republic and Ireland (both 17.4%), the United Kingdom (16.7%), Lithuania (15.9%), Germany (15.8%), Austria (15.6%), Denmark (15.3%), Finland (14.5%) and France (14.2%).
On the contrary, general public services, which include external affairs and public debt transactions, represented the second most important type of general government expenditure in Cyprus (24.4%), Hungary (20.9%), Croatia (18.8%), Portugal (17.9%), Italy (17.5%), Malta (16.5%), Belgium and Spain (both 15.5%), Sweden (14.6%) and Poland (13.5%).
Economic affairs expenditure made up the second largest share of general government expenditure in Greece (25.5%) and Slovenia (24.2%) mainly driven by one-off support to financial institutions, as well as in Romania (17.5%) and Bulgaria (13.2%), while it was education in Latvia (15.7%), Estonia (15.4%) and Luxembourg (12.7%).
Share of education expenditure varied by one to two across EU Member States
With a share above 15% of total general government expenditure in 2013, Cyprus (15.7%) and the three Baltic EU Member States – Latvia and Lithuania (both 15.7%) as well as Estonia (15.4%) – recorded the highest proportions devoted to education among EU Member States, while Greece (7.6%), Italy (8.0%) and Romania (8.1%) had the lowest.
The area ‘culture, recreation and religion’ accounted for less than 3.5% of general government expenditure in every EU Member State, except Estonia (5.4%), Latvia (4.2%) and Hungary (3.7%).
The share of general government expenditure related to environmental protection was generally limited across EU Member States, with the notable exceptions of Malta and the Netherlands (both 3.2%).
The share of ‘public order and safety’ expenditure in total government expenditure was higher in Slovakia (8.0%), Bulgaria (7.0%) and Romania (6.3%) than in other EU Member States, while for ‘defence’ the United Kingdom (5.0%), Estonia (4.7%), Poland (3.9%), Cyprus (3.8%) and Greece (3.6%) registered the highest proportions.
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