Archive:Government expenditure on economic affairs - 2012 results
EU-27 government expenditure on economic affairs stable at 4.1 % of GDP in 2012 compared with 2011 - Expenditure on 'transport' has the highest share of expenditure in economic affairs
Statistics in focus 6/2014; Authors: Maria Raquel DIAS, Martim ASSUNÇÃO, Laurent FREYSSON, Michele MAROTTA, Laura WAHRIG
ISSN:2314-9647 Catalogue number:KS-SF-14-006-EN-N
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This publication analyses trends in the structure of general government expenditure in the economic affairs’ function (according to the Classification of the Functions of Government - COFOG) and presents for the first time detailed COFOG data on economic affairs for the EU and EFTA countries. This became possible due to progress in the availability and quality of voluntarily transmitted COFOG level II data.
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Main statistical findings
In 2012, EU-27 general government expenditure amounted to 49.3 % of GDP. Considering the latest available data for 2012, expenditure on the economic affairs’ function reached 4.1% of GDP (4.0% in 2011). Compared with 2011, this function also remained almost constant when considering the share in total government expenditure (8.3 % in 2012 and 8.1 % in 2011).
EU-27 general government expenditure on economic affairs
In the EU-27, general government expenditure on economic affairs amounted to around EUR 534 billion in 2012, or 4.1 % of GDP. As a ratio to GDP, the highest levels of government expenditure were found in Belgium (7.0 % of GDP, influenced by a capital injection to a financial institution treated as a capital transfer amounting to 0.8 % of GDP), Hungary and Romania (both 6.2 % of GDP). The lowest ratios to GDP were found in the United Kingdom, Portugal (both at 2.8 % of GDP) and Cyprus (3.1 % of GDP).
In 2011, Ireland was the country with the highest level of government expenditure (7.9 % in 2011 and 3.6 % in 2012), with the 2011 figure having been influenced by a series of capital injections treated as capital transfers to support financial institutions.
Expenditure on economic affairs in 2012
EU-27 expenditure on economic affairs accounted for 8.4% of total government expenditure in 2012
The economic affairs’ function accounts for 8.4 % (8.3 % in 2011) of total government expenditure in the EU-27 (Table 2). After 'social protection' (40.3 %), 'health' (14.9 %), 'general public services' (13.5 %) and 'education' (10.7 %), it is one of the most important functions of general governments in the EU-27.
In 2012 it accounted for more than two thirds of total government expenditure on 'subsidies' (71 %). Over half of total government expenditure on 'capital transfers' (62 %) and 33 % of total expenditure on 'capital investments' was recorded in the economic affairs division.
The level of expenditure in the economic affairs division is typically influenced by one-off events such as the sale of UMTS licences (to be recorded in most cases as negative expenditure, disposal of a non-financial non-produced asset in COFOG group 04.6 'communication'), capital injections recorded as capital transfers to financial corporations and guarantee calls.
Currently COFOG group data is not available or published for four countries or the EU as a whole (as well as Switzerland). Nonetheless, it is possible to deduce that the group ‘transport’ accounts for the largest share in expenditure in this division in most countries and over half the expenditure in the division at the level of the EU. This group includes expenditure on administration, regulation, construction and maintenance of infrastructure (including road, water, railway and air transport as well as any infrastructure for the transport of goods such as pipelines) as well as the operation of public transport corporations classified with the general government sector and any subsidies to market producers to operate public transport.
Among the reporting countries for which this detail is available, in 2012 'transport' accounted for between 8 % and 9 % of total government expenditure in Bulgaria, Poland and the Czech Republic, but only for between 2 % and 3 % in Cyprus, Greece, France and the United Kingdom. The variations in the share of 'transport' in total expenditure seem largely due to the presence or absence of subsidies for the operation of public transport and the classification of public transport companies in general government or in the sector of 'non-financial corporations'.
In Belgium and Greece in 2012, 'transport' did not account for the largest share in expenditure on economic affairs. This was due to capital transfers to support financial institutions recorded in 'general economic affairs' and 'economic affairs n.e.c.' respectively. The current guidance on COFOG allows countries to record capital injections treated as capital transfers to support financial institutions in either of these COFOG groups, with Belgium having chosen the former and Greece having chosen the latter option.
The high overall expenditure in the economic affairs' division in Spain in 2012 is also due to capital transfers to financial institutions.
The second most important group in this function is ‘general economic, commercial and labour affairs’, including foreign commercial affairs and labour market policy expenditure as well as capital transfers to support banks in a number of countries. For the EA-17, this accounted for around 30% of total expenditure in the division.
The group ‘communication’ accounts for the smallest proportion of expenditure in the Economic Affairs’ division – 0.05 % of total expenditure for the EA-17. Nonetheless, this result is also influenced by the negative expenditure from the allocation of UMTS licences recorded as a disposal of a non-financial non-produced asset. By convention, the item 'aquisitions less disposals of non-financial non-produced assets', which is netted, is recorded as part of total expenditure. This means that dispoals of non-financial non-produced assets such as most UMTS licence sales enter total expenditure as a negative item. In 2012, this led to negative total expenditure in this group in France, Hungary and Portugal (UMTS licence sales also took place in Belgium and Romania). These one-off events need to be taken into account when comparing the evolution of expenditure over time.
Evidence of the detailed data sources for this COFOG division is provided by the small percentage of the ‘not elsewhere classified’ group, which accounts only for around 4 % of total expenditure in the division.
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 (ESA95) 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 ESA95 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 voluntary basis. The main reference years used in this publication are 2012 as the latest year available and 2002 as the first year for which complete data on expenditure by function are available at EU-27 level.
Data was extracted on 07 March 2014.
Provisional data
Data for Bulgaria (BG), Greece (EL), Hungary (HU), Iceland (IS) and Sweden (SE) (2012 only) is provisional.
Definition of general government and its sub-sectors
The data relate to the general government sector of the economy, as defined in ESA95, paragraph 2.68: 'All institutional units which are other non-market producers [institutional units whose sales do not cover more than the 50 % of the production costs, see ESA95 paragraph 3.26] whose output is intended for individual and collective consumption, and mainly financed by compulsory payments made by units belonging to other sectors, and/or all 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'.
COFOG level II data
COFOG level II data is published only in agreement with the country concerned. The development of COFOG level II data is not completed in many Member States and data needs to be looked at with this in consideration. The transmission of COFOG level II data for the general government will become compulsory by the end of December 2014.
For BE and SK, COFOG group data is available but not published. For ES, COFOG group data is available for 2012, but not published pending the availability of more final data. For HR and RO, COFOG group data is not available.
Definition of general government expenditure
Government expenditure is defined in Commission Regulation 1500/2000 which uses as reference a list of ESA95 categories: Government 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.51); (b) changes in inventories (P.52); (c) acquisitions less disposals of valuables (P.53); where
- P.51, '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 95;
- D.5, 'current taxes on income, wealth, etc, payable';
- D.62, social payments: cover social benefits and pensions paid in cash;
- D.6311, D.63121, D.63131, 'Social transfers in kind related to expenditure on products supplied to households via market producers';
- D.7, 'other current transfers, payable';
- D.8, 'adjustment for the change in net equity of households in pension fund reserves'
- D.9, 'capital transfers payable'
- K.2, '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 K.2.
- Other current expenditure includes D.7, D.29, D.5 and D.8.
Gross Domestic Product
Throughout this publication, nominal GDP, i.e. GDP at current prices is used.
Time of recording & symbol
In the ESA95 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
"p" provisional
"pp" percentage points
More data and information
For country-specific notes, e.g. on missing data, please refer to the metadata published on Eurobase. The authors can be contacted at ESTAT-ESA95-GOV@ec.europa.eu
Context
In the framework of the European System of National Accounts (ESA95), Eurostat collects data on general government expenditure by economic function according to the international Classification of the Functions of Government (COFOG) – see methodological note. This publication presents for the first time detailed COFOG data on public order and safety for the European countries. This became possible due to progress in the availability and quality of voluntarily transmitted COFOG level II data.
See also
- Government expenditure by function – COFOG
- Government finance statistics - quarterly data
- Integrated government finance statistics presentation
- Structure of government debt
Further Eurostat information
Publications
Main tables
Database
- Annual government finance statistics (gov_a)
- General government expenditure by function (COFOG) (gov_a_exp)
Dedicated section
Methodology / Metadata
- General government expenditure by function (COFOG) (ESMS metadata file — gov_a_exp_esms)
- Manual on sources and methods for the compilation of COFOG statistics - Classifications of the Functions of Government - 2011 edition
Source data for tables (MS Excel)
