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GDP share of general government expenditure reduced

01/03/2023 09:02

In 2021, general government total expenditure in the EU amounted to 51.5% of gross domestic product (GDP) and was still influenced by the COVID-19 pandemic and government measures to mitigate its effects, according to data released by Eurostat, the statistical service of the EU.

The decrease in the ratio compared with the previous year (52.8%) was mainly a consequence of increases in GDP, while growth in total expenditure was still observed (7,475 billion euro in 2021 compared with 7,111 billion in 2020; an increase of 364 billion, growing by 5.1% compared with 2020).

This ratio also decreased in Cyprus, with general government total expenditure in 2021 accounting for 43.1% of GDP, compared with 44.6% in 2020.

Among the main functions of general government expenditure in the European Union, ‘social protection’ remained the most important in 2021, equivalent to 20.5% of GDP. The next most important areas were health (8.1%), economic affairs (6.3%) and general public services (6.0%), such as external affairs and public debt transactions, and education (4.8%). The functions public order and safety (1.7%), defence (1.3%), recreation, culture and religiom (1.2%), environmental protection (0.8%) and housing and community amenities (0.6%) had more limited weights.

In Cyprus, the largest share of government expenditure was recorded under the function of social protection (12.5% of GDP), followed by general public services (6.9%), health (6.4%), education (5.5%), economic affairs (5.2%), housing and community amenities (1.9%), defence (1.8%), public order and safety (1.7%), recreation, culture and religion (0.7%) and environmental protection (0.4%).

At EU level, general government total expenditure increased for all the major functions. Still, increases were concentrated in health (+103 billion euro), economic affairs (+96 billion euro) and social protection (+41 billion euro), with a 50 billion euro decrease for unemployment being off-set by increases in ‘old age’ and other detailed functions within social protection.

The situation in Cyprus was relatively more complex. The share of general government expenditure in the GDP decreased for the functions of social protection (from 13.4% of GDP to 12.5%), general public services (from 7.5% to 6.9%), education (from 5.8% to 5.5%), economic affairs (from 5.5% to 5.2%), defence (from 1.9% to 1.8%), public order and safety (from 1.8% to 1.7%) and recreation, culture and religion (from 0.9% to 0.7%).

On the other hand, the share increased in health (from 5.9% to 6.4%), housing and community amenities (from 1.5% to 1.9%) and environmental protection from (0.3% to 0.4%).

Social protection first in all member states

Social protection represented the most important area of general government expenditure in 2021 for all the EU members. Government social protection expenditure as a percentage of GDP varied across Member States from 8.7% in Ireland, 11.0% in Malta, 12.5% in Cyprus and 13.1% in Hungary, to nearly a quarter in France (24.8%), Finland (24.6%) and Italy (23.4%).

In 2021, Austria (10.1%), Czechia (9.8%) as well as Denmark and France (both 9.2%) recorded the highest ratios of government expenditure to GDP devoted to health among the EU members.

The highest ratios of government expenditure to GDP on economic affairs in 2021 were recorded in Greece (10.7%), Austria (9.3%) and Hungary (9.2%), ahead of Malta (9.0%).

The highest ratios of government expenditure to GDP on general public services were observed in Italy and Finland (both 8.1%), Hungary (8.0%) and Greece (7.9%).

For education, the highest ratios to GDP were registered in Sweden (6.7%), followed by Belgium (6.3%) and Denmark (6.0%).