Government expenditure by function – COFOG

Data extracted on 29 February 2024

Planned article update: February 2025

Highlights

In 2022, total government expenditure in the EU amounted to 49.6% of gross domestic product (GDP).

Click on the image for an interactive view of the data.

This article 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).

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 (ESA2010).

This article is part of an online publication on general government expenditure by function.

Full article

General overview

In 2022, EU general government total expenditure stood at 49.6 % of GDP, an increase as compared to 2019 when it stood at 46.6 % of GDP, but a decrease compared to 2020 and 2021, when it stood at 52.8 % of GDP and 51.3 % of GDP, respectively. In 2022, the general government total expenditure to GDP ratio was still influenced by the COVID-19 pandemic and government measures to mitigate its effects, although to a lesser extent than in 2020 and 2021. On the other hand, government measures to mitigate the impact of increasing energy prices strongly influenced the level and composition of government expenditure. The decrease in the ratio compared to the previous year was mainly a consequence of increases in GDP, while growth in total expenditure was still observed (€7 894 in 2022 compared with €7 516 billion in 2021; an increase of €377 billion, growing by 5.0 % compared with 2021).

Based on the latest available expenditure data by economic function for 2022, at EU level, more than half was devoted to the functions 'social protection' (39.2 % of total expenditure) and 'health' (15.5 % of total expenditure), which equalled 19.5 % and 7.7 % of GDP respectively. The other functions of government spending with a large share of government expenditure are 'general public services' (12.1 % of total expenditure or 6.0 % of GDP), 'economic affairs' (11.8 % of total expenditure or 5.9 % of GDP) and 'education' (9.5 % of total expenditure or 4.7 % of GDP).

The functions 'public order and safety' (3.4 % of total expenditure or 1.7 % of GDP), 'defence' (2.6 % of total expenditure or 1.3 % of GDP), 'recreation, culture and religion' (2.3 % of total expenditure or 1.1 % of GDP), 'housing and community amenities' (2.0 % of total expenditure or 1.0 % of GDP) and 'environmental protection' (1.6 % of total expenditure or 0.8 % of GDP) had more limited weights at EU level in 2022.

EU general government expenditure stood at 49.6 % of GDP in 2022

General government expenditure amounted to 49.6 % of GDP in 2022.

As a ratio to GDP in 2022, the highest levels of government expenditure were found in France (58.3 % of GDP), followed by Italy (56.1 % of GDP), Finland (53.5 % of GDP), Austria and Belgium (both 53.2 % of GDP) and Greece (52.9 % of GDP), while the lowest levels were found in Ireland (21.2 % of GDP), Lithuania (36.4 % of GDP), Cyprus (38.8 % of GDP) and Malta (39.3 % of GDP). Switzerland (33.0 % of GDP) recorded the lowest level among the EFTA countries.

Figure 1: General government total expenditure, 2022, % of GDP
Source: Eurostat (gov_10a_main)

General government expenditure by function

In the EU Member States as well as EFTA countries reporting data, 'social protection' remained the most important function of government expenditure. In 2022, government social protection expenditure in the EU amounted to €3 098 billion (an increase by €113 billion compared to 2021) and was equivalent to 19.5 % of GDP (see Table 1), compared to 20.4 % of GDP in 2021. At EU level, the main contributor to the 2022 increase of government social protection expenditure related to 'old age' (increase by €87 billion compared to 2021) coupled with 'social exclusion not elsewhere classified' (increase by €32 billion compared to 2021), the latter comprising support to households for increasing energy prices as well as support to refugees. This off-set the decrease for 'unemployment' (decrease by €59 billion compared to 2021), due to a reduction in expenditure on furlough schemes and unemployment support. The share of social protection expenditure in total expenditure decreased from 39.7 % of total expenditure in 2021 to 39.2 % of total expenditure in 2022. Over the period 1995 to 2022, the share of social protection expenditure in total expenditure at EU level increased from 36.6 % of total expenditure to 39.2 % of total expenditure.

Table 1: Total general government expenditure by function, 2022 (% of GDP)
Source: Eurostat (gov_10a_exp)

At EU level, the next most important functions in terms of government expenditure were 'health' and 'general public services', amounting to €1 221 billion or 7.7 % of GDP and €956 billion or 6.0 % of GDP respectively in the EU in 2022. 'Economic affairs' (€932 billion or 5.9 % of GDP) and 'education' (€746 billion or 4.7 % of GDP) followed. The remaining functions – 'public order and safety' (€272 billion or 1.7 % of GDP), 'defence' (€204 billion or 1.3 % of GDP), 'recreation, culture and religion' (€182 billion or 1.1 % of GDP), 'housing and community amenities' (€154 billion or 1.0 % of GDP) and 'environmental protection' (€130 billion or 0.8 % of GDP) - together represented 5.9 % of EU GDP in 2022.

Ratio of social protection expenditure highest in France and Finland, lowest in Ireland

While social protection represented the most important area of general government expenditure in 2022 for all the EU countries, a wide variation was observed among the EU countries. Government social protection expenditure as a percentage of GDP varied from 7.5 % of GDP in Ireland, 10.1 % in Malta, 11.8 % in Cyprus and 12.7 % in Estonia (as well as 11.1 % in Iceland among EFTA countries), to 23.8 % of GDP in France, 23.6 % in Finland and 21.9 % in Italy.

Government expenditure on health highest in Austria, on economic affairs highest in Hungary, on education highest in Belgium and Sweden

In 2022, Austria (9.3 % of GDP), Czechia and France (both 9.1 % of GDP) 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 2022 were recorded in Hungary (10.5 %), ahead of Greece (10.0 %).

The highest ratios of government expenditure to GDP on general public services were observed in Italy (8.6 %), Hungary (8.2 %) and Finland (7.8 %).

For education, the highest ratios to GDP were registered in Belgium and Sweden (both 6.3 % of GDP), followed by Estonia (5.8 % of GDP).

Evolution of general government total expenditure by function

Between 1995 and 2007, total general government expenditure decreased as a ratio to GDP from 53.2 % of GDP in 1995 to 45.6 % of GDP in 2007. This decrease was mainly reflected in the functions 'general public services' and 'social protection' as well as 'economic affairs' due to a one-off event in 1995. During the first three years of the economic and financial crisis (2007-2009), government expenditure as a percentage of GDP grew in the EU. It increased from 45.6 % of GDP in 2007 to 50.7 % in 2009, which was partially due to a lower GDP. Apart from an increase between the years 2011 and 2012 (from 49.2 % of GDP to 49.8 % of GDP), it steadily decreased to 46.5 % of GDP in 2018 and 46.6 % of GDP in 2019. This gradual decrease was partly the result of the fiscal consolidation measures, renewed economic growth and counter-cyclical reactions of government expenditure. In recent years, one-off expenditure to support financial institutions has been decreasing.

Due to the COVID-19 pandemic and government measures to mitigate its effects, total general government expenditure in the EU increased strongly in 2020 (52.8 % of GDP) compared to 2019. This was a consequence of decreases in the GDP between 2019 and 2020 as well as increases in total expenditure. At EU level, in 2020, general government total expenditure increased for all the major functions, but increases were concentrated in 'social protection' (of which a major part for 'unemployment'), 'economic affairs' and 'health'. In 2021, general government total expenditure decreased as a ratio to GDP to 51.3 % of GDP.

At EU level in 2022, total general government expenditure was 49.6 % of GDP, a decrease compared to 2021 and mainly a consequence of increases in GDP, while growth in total expenditure was still observed. At EU level, in 2022, general government total expenditure increased in absolute terms for all the major functions. There was a +€113 billion increase in 'social protection' (with a -€59 billion decrease for 'unemployment' being off-set by increases in 'old age' and other detailed functions within social protection). General public services also registered a strong increase (+€82 billion), as did education (+€43 billion) and health (+€39 billion). The strongest relative increases were observed for housing and community affairs amenities (+20.5 %), and defence (+10.5 %). While in 2022, general government expenditure was less impacted by measures to mitigate the effects of the COVID-19 pandemic, a strong influence of government measures to mitigate the impact of rising energy prices could be observed.

Figure 2: Evolution of total general government expenditure, EU, 2021-2022, % of GDP
Source: Eurostat (gov_10a_exp)

Not all the functions of government expenditure evolved the same between 2007 and 2022. Some of the functions have a natural tendency to be counter-cyclical, even without a change in policy. For example, government expenditure on unemployment benefits (part of social protection) is more prone to have a natural counter-cyclical evolution than other functions, such as government expenditure on education. During an economic crisis, more people become unemployed, whereas the number of pupils and students is more affected by slower demographic changes.

Between 2007 and 2009, expenditure on 'unemployment' in the EU increased from 1.5 % of GDP to 1.9 %, decreasing to 1.3 % of GDP in 2019. Due to the COVID-19 pandemic and the government measures to mitigate its economic and social impact, this ratio increased to 2.2 % of GDP in 2020. Between 2019 and 2020, at EU level, expenditure on unemployment increased from €180 billion to €297 billion, that is an increase of +€117 billion. In 2021, at EU level, expenditure on unemployment stood at €247 billion, compared to 2020 this represents a decrease of €50 billion. In 2022, expenditure on unemployment decreased by a further - €59 billion to €188 billion and amounted to 1.2 % of GDP.

Social protection expenditure as a whole increased from 17.6 % of GDP (2007) to 19.8 % (2009). Social protection expenditure decreased from 19.7 % of GDP in 2016 to 19.3 % of GDP in 2019 - together with the drop in expenditure on general public services (6.3 % of GDP in 2016 decreasing to 5.8 % of GDP in 2019), it is the main driver of the decrease in total expenditure in this period. In terms of the share of total expenditure, the share of 'social protection' expenditure was 38.4 % in 2008 thereafter increasing to 41.7 % of total expenditure in 2016, followed by a gradual decrease to 41.4 % of total expenditure in 2020, and then an important decrease to 39.7 % of total expenditure in 2021 and further decline to 39.2 % of total expenditure in 2022. In terms of absolute amounts, EU total expenditure on social protection increased from €2 948 billion in 2020 to €2 985 billion in 2021 and to €3 098 billion in 2022.

Figure 3: Evolution of general government total expenditure, EU, 1995-2022, % of GDP
Source: Eurostat (gov_10a_exp)

Expenditure related to 'economic affairs' peaked in 1995 (13.6 % of total expenditure) due to an assumption of debt relating to a former German holding company. In 2010, the high level of capital transfers to support financial institutions at the height of the financial crisis also contributed to a higher relative share of expenditure on 'economic affairs'(10.9 % of total expenditure). The government measures to mitigate the economic and social impact of the COVID-19 pandemic in the form of subsidies, other current and capital transfers caused the share of general government expenditure on 'economic affairs' in total expenditure to increase to 11.5 % in 2020 and to 12.2 % in 2021. Still influenced by the COVID-19 pandemic and government measures to mitigate its effects, but to a lesser extent the share of general government expenditure on 'economic affairs' in total expenditure declined to 11.8 % in 2022. Expenditure on 'economic affairs' increased from €620 billion in 2019 to €932 billion in 2022, representing one of the strongest relative increase among the main functions of government expenditure. In terms of COVID measures, a number of subsidies to support businesses through pandemic related closures as well as some furlough schemes are recorded within this function.

Table 2: Evolution of general government total expenditure, EU, 1995-2022, % of GDP and % of total expenditure
Source: Eurostat (gov_10a_exp)

Relatively stable shares of total expenditure over 1995-2022 are noted for 'public order and safety', 'environmental protection' and 'recreation, culture and religion'.

A steady increase over the period from 1995 to 2022 is noted for 'health', where the shares in total expenditure increased from 11.1 % of GDP in 1995 to 15.5 % of total expenditure in 2022. However, between 2021 and 2022, a decrease from the peak of 15.7 % of total expenditure in 2021 is observed. EU expenditure on health increased from €979 billion in 2019 to €1 078 billion in 2020 and €1 181 billion in 2021, and in 2022 it stood at €1 221 billion (an increase of +€39 billion compared to 2021).

Expenditure on 'education' increased from 9.2 % of total expenditure in 1995 to 10.1 % of total expenditure in 2019. However, the relative share of expenditure on 'education' decreased in 2020 and 2021 to 9.4 % of total expenditure due to a lesser impact of the COVID-19 pandemic for this function and before increasing slightly again to 9.5 % of total expenditure in 2022.

Decreases in the share of total expenditure over 1995 to 2022 are noted for 'defence' (3.1 % of total expenditure in 1995 and 2.6 % of total expenditure in 2022) and general public services (17.9 % of total expenditure in 1995 and 12.1 % of total expenditure in 2022).

Detailed data by function

The figures at EU level mask disparate situations in the EU and EFTA countries - more detail is given in the articles below..

All these different functions are developed in 10 statistical articles as follows:

Expenditure on 'general public services'

Expenditure on 'defence'

Expenditure on 'public order and safety'

Expenditure on 'economic affairs'

Expenditure on 'environmental protection'

Expenditure on 'housing and community amenities'

Expenditure on 'health'

Expenditure on 'recreation, culture and religion'

Expenditure on 'education'

Expenditure on 'social protection'

Composition of general government total expenditure by function

The COFOG classification allows for an analysis of general government total expenditure by its socio-economic purpose - in other words "why" government spent money. An analysis by ESA transaction allows for an analysis of how government spent money.

Figure 4: General government expenditure by function and transaction, EU, 2022, % of TE
Source: Eurostat (gov_10a_exp)

The most important component of government total expenditure are social benefits (in cash) and social transfers in kind ( - purchased market production). Social cash benefits are paid to households in order to relieve them of social risks or needs. Examples of social transfers are pension payments, unemployment benefits and child allowances. In 2022 in the EU, social benefits (in cash) and social transfers in kind ( - purchased market production) made up 43.6 % of government total expenditure or €3 439 billion. The majority of social transfers in kind are classified in the function 'social protection', with significant amounts also recorded in 'health' and to a lesser extent 'education'.

Compensation of employees made up 20.3 % of government expenditure in the EU in 2022 and amounted to €1 600 billion. It consists of wages and salaries of government employees as well as employers' social contributions. The largest amounts of compensation of employees were assigned to 'education', followed by 'health', 'general public services' and 'public order and safety'.

Intermediate consumption made up 12.1 % of government expenditure in the EU in 2022 and amounted to €958 billion. It consists of government purchases of goods and services, excepts where these are regarded as capital formation. Important amounts were assigned to the functions 'health', 'general public services', 'economic affairs', 'education' and 'social protection'.

As regards other current transfers expenditure, these amounted to €415 billion and made of just over 5.3 % of total expenditure in the EU in 2022. Two important kinds of other current transfers - current international cooperation as well as own resource contributions to the EU budget are recorded within the function 'general public services'. Important amounts were also allocated to 'social protection' and 'education'.

In 2022, at the level of the EU, subsidies (4.4 % of total expenditure; €349 billion) and capital transfers - including investment grants – (€295 billion; 3.7 % of total expenditure) were concentrated in the function 'economic affairs', with important amounts of capital transfers also observed in 'housing and community amenities'.

Property income expenditure (€258 billion and 3.3 % of total expenditure) - consisting mainly of interest payments - was concentrated in the function 'general public services' (and the group 'public debt transactions' in particular).

Capital investments (gross capital formation) made up 6.7 % of general government total expenditure in the EU in 2022. They were concentrated in the division 'economic affairs', which includes notably the group 'transport'.

Figure 5: General government expenditure by function and transaction, EU, 2022, € billion
Source: Eurostat (gov_10a_exp)

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 general government sector from the reference years 2001 onwards. The main reference year used in this publication is 2022 as the latest year available at EU level.

Data was extracted on 29 February 2024.

Provisional data

While a significant effort was undertaken to harmonise the recording of government measures to alleviate the impact of increasing energy prices, a full harmonisation of data for the reference year 2022 was not yet achieved.

Data for the EU and euro area aggregates (2022), Belgium (2022), Germany (2020-2022), Spain (2022), France (2021-2022) and Portugal (2022) 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).

Further information is available in the Eurostat Manual on sources and methods for the compilation of COFOG Statistics.

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.

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 & symbols used

In the ESA 2010 system, recording is 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.