Public expenditure on social protection accounts for almost 20 % of GDP in the EU
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Public expenditure on social protection accounts for almost 20 % of GDP in the EU

Social protection was by far the most important expenditure area in the EU in 2015. The next most important areas were health (7.2%), ‘general public services’ such as external affairs and public debt transactions (6.2 %), education (4.9 %) and ‘economic affairs’ (4.3 %).

The functions ‘public order and safety’ (1.8 %), defence (1.4 %), ‘recreation, culture and religion’ (1.0%), ‘environmental protection’ (0.8 %) and ‘housing and community amenities’ (0.6 %) had more limited weights.

In 2015, government expenditure amounted to 47.3 % of GDP in the EU, while in 2014 it amounted to 48.1 % of GDP.

These data at EU level mask however significant differences between the Member States in the share of GDP devoted to each function of general government expenditure, reported Eurostat, the statistics office of the EU, yesterday (6 March).

The ratio of government social protection expenditure to GDP varied across EU Member States from less than 10 % in Ireland (9.6 %) to over a quarter in Finland (25.6 %).

Eight Member States – Finland, France, Denmark, Austria, Italy, Sweden, Greece and Belgium – devoted at least 20% of GDP to social protection, while Ireland, the three Baltic Member States, Romania, Cyprus, Malta and the Czech Republic each spent less than 13% of GDP on social protection.

Eurostat writes that the share of social protection in public expenditure reflects government’s core function to redistribute income and wealth, financed by compulsory payments.

Social protection expenditure can be further broken down into different social benefits and transfers. The group ‘old age pensions’ made up the largest part (on average 10.3 %) in all Member States.

Expenditure on ‘old age’ as a share of GDP was highest in 2015 in Greece (15.7 %), followed by Italy (13.8 %), France (13.6 %), Finland (13.4 %) and Austria (13.1 %). In contrast, Ireland (2.4 %), Cyprus and Lithuania (both 5.8 %) recorded the lowest shares.

Government expenditure on health and education varied significantly across Member States. With shares of at least 8 % of GDP in 2015, Denmark (8.6 %), France (8.2 %), the Netherlands and Austria (both 8.0%) recorded the highest proportions devoted to health among Member States.

Denmark (7.0 % of GDP), Sweden (6.5 %) and Belgium (6.4 %) registered the highest shares of government expenditure on education in 2015.

The highest shares of government expenditure on general public services in 2015 were observed in Cyprus (10.2% of GDP) and Greece (9.9%). This area includes among others public debt transactions.

For government expenditure on economic affairs, the highest percentages in 2015 were recorded in Greece (8.9 % of GDP) and Hungary (8.6 %).  The relatively high figures are explained by capital injections into banks.

In 2015, defence expenditure amounted to 1.4 % of GDP for the EU-28. The highest levels of total expenditure on defence were observed in Greece (2.7 % of GDP), followed by the United Kingdom (2.1 % of GDP), Estonia (1.9 % of GDP) and France (1.8 % of GDP).

Eurostat’s figures can be used to analyze government spending and identify areas where there is room for savings or where spending should be increased.

The Brussels Times (Source: Eurostat)