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GDP share of general government expenditure reduced in EU and Cyprus in 2021

ÊÅÍÔÑÉÊÇ ÔÑÁÐÅÆÁÓ ÊÕÐÑÏÕ

In 2021, general government total expenditure in the EU amounted to 51.5 per cent 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 per cent) was mainly a consequence of increases in GDP, while growth in total expenditure was still observed (€7. 5 billion in 2021 compared with €7.1 bn in 2020; an increase of 364 bn, growing by 5.1 per cent compared with 2020).

This ratio also decreased in Cyprus, with general government total expenditure in 2021 accounting for 43.1 per cent of GDP, compared to 44.6 per cent 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 per cent of GDP. The next most important areas were health (8.1 per cent), economic affairs (6.3 per cent) and general public services (6.0 per cent), such as external affairs and public debt transactions, and education (4.8 per cent). The functions public order and safety (1.7 per cent), defence (1.3 per cent), recreation, culture and religiom (1.2 per cent), environmental protection (0.8 per cent) and housing and community amenities (0.6 per cent) had more limited weight.

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

At EU level, general government total expenditure increased for all the major functions. Still, increases were concentrated in health (+€103 bn), economic affairs (+€96 bn) and social protection (+€41 bn), with a €50 bn 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 per cent of GDP to 12.5 per cent), general public services (from 7.5 per cent to 6.9 per cent), education (from 5.8 per cent to 5.5 per cent), economic affairs (from 5.5 per cent to 5.2 per cent), defence (from 1.9 per cent to 1.8 per cent), public order and safety (from 1.8 per cent to 1.7 per cent) and recreation, culture and religion (from 0.9 per cent to 0.7 per cent).

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

 

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 per cent in Ireland, 11.0 per cent in Malta, 12.5 per cent in Cyprus and 13.1 per cent in Hungary, to nearly a quarter in France (24.8 per cent), Finland (24.6 per cent) and Italy (23.4 per cent).

In 2021, Austria (10.1 per cent), Czechia (9.8 per cent) as well as Denmark and France (both 9.2 per cent) 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 per cent), Austria (9.3 per cent) and Hungary (9.2 per cent), ahead of Malta (9.0 per cent).

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

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

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