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BRIEFING
Composition of Public Expenditures in the EU
This briefing provides an overview of the structure of public expenditures across EU Member States, by delving into
their composition according to the classification of the functions of government provided by Eurostat. The overview
aims at identifying similarities and differences among EU Members States in 2018 and spotting possible trends of
convergence and divergence since 2008. This note is regularly updated.
In the EU Member States, public expenditures constitute a very high component of GDP and of domestic
demand. Public expenditures characterize the ‘social market economy’, mentioned in the EU Treaty as
one of its aims (Art. 3(3) TEU). Together with taxation policies, public expenditures constitute the main
field of application of the fiscal policy of a government. To understand the structure of an economy, as
well as its strengths and weaknesses, both the level and the composition of public expenditures are
relevant. In the context of the 2020 European semester, the Council Recommendation on the economic
policies of the euro area requires Member States to “improve the quality and composition of public
finances”.
In the EU, the share of GDP devoted by governments to the provision of public goods varies greatly, as
does its composition. Public finance expenditure amounted to 46.7 % of EU27 GDP in 2018, unchanged
compared to 2017. The average public finance expenditures per EU citizen amounted to 14,078 €. For
a citizen living in the Euro area, the amount was 15,846€.
Graph 1 shows the average composition of public expenditures in the EU for key social and economic-
related categories, in 2018. The highest amount was devoted to Social protection, with 19.2 % of EU
GDP, followed by Health, corresponding to 7.0 % of GDP.
Data on the composition of public expenditures follow the Classification of the Functions of Government
(COFOG) and are published by Eurostat. Table 1 provides the list and a short description of the main
categories of expenditures, which are in turn divided in sub-groups and classes. Annex 1 to this document
presents detailed data for 2008 and 2018.
Graph 1: EU average composition of public expenditures as % of GDP and expenditure per capita 2018
Culture and Education
Defence and Safety 5.7% - 1,743 € Social protection 19.2 % -
2.9% - 868 € 5,799 €
Economic affairs
4.4% - 1,322 €
Environment and
Housing 1.4% - 412
€
General public
services 6.0% - Health 7.0%- 2,114
1,821 € €
Source: Eurostat. For representation purposes, some categories are merged.
Economic Governance Support Unit (EGOV)
Author: Saverio Lenzi and Alice Zoppè
Directorate-General for Internal Policies
PE 634.371 – June 2020
ENIPOL | Economic Governance Support Unit
Table 1: Description of COFOG 1 categories
Social Pensions for old age and survivors, for sickness and disability. Subsidies for family and children.
Protection Unemployment subsidies. R&D on social protection.
Health Public health services; medical products, appliances and equipment; outpatient services; hospital
services. R&D related to health.
General Public Executive and legislative organs (i.e. Ministries and Parliament), financial and fiscal affairs, public
Services debt transactions (i.e. interests on debt); external affairs (i.e. embassies), foreign economic aid,
general services, basic research. R&D related to general public services.
Education Pre-primary, primary, secondary and tertiary education, post-secondary non-tertiary education,
education non-definable by level, subsidiary services to education. R&D on education.
Economic General economic, commercial and labour affairs; agriculture, forestry; fishing and hunting; fuel and
Affairs energy; mining, manufacturing and construction; transport; communication. R&D on economic
affairs.
Public order Police services; fire-protection services; law courts, prisons. R&D related to public order and safety.
and safety
Defence Military defence; civil defence; foreign military aid. R&D related to defence
Recreation, Recreational and sporting services; cultural services; broadcasting and publishing services;
culture and religious and other community services. R&D related to recreation, culture and religion
religion
Environmental Waste management; water waste management; pollution abatement; protection of biodiversity and
protection landscape. R&D related to environmental protection.
Housing and Housing development; community development; water supply; street lighting. R&D related to
community housing and community amenities
services
Expenditures across EU Member States from a functional perspective
Public expenditures in the EU27 constituted 46.7% of GDP in 2018, 0.5 p.p. more than in 2008 (46.2%). In the
Euro area, they slightly decreased from 47.2% in 2017 to 47.0% in 2018 (they were 46.6% in 2008) 2 3.
Graph 2 shows the total expenditures as percentage of the GDP in 2018 across the EU27. Ireland 4 and
Lithuania registered the lowest shares (25.4% and 34.0% respectively), while France and Finland had the
highest (56.0% and 53.1% respectively).
1
Member States are required to submit data on their annual finance statistics, based on the European System of Accounts (ESA2010)
transmission programme. In this note “General Government expenditure” and “Public expenditure” are used as synonyms. National data on
‘Expenditure of general government by function’ are available twelve months after the period of reference. The main reference year explored
in this briefing is 2018.
2
An ECB paper on “Composition of public finances in the euro area” presents, inter alia, a review of the literature.
3
Esteban Ortiz-Ospina and Roser (2016) presents an extensive analysis of the historical evolution of Government spending around the world.
4
It should be noted that data for Ireland are affected by its specific “statistical characteristic”: due to the elevated presence of multinational
activities, GDP somehow overestimates the national income. See this note from the National Department of Finance for further details.
2 PE 634.371Composition of Public Expenditures in the EU
Graph 2: General government expenditure as % of GDP in 2018 in EU Member States, the EU27 and
the EA
60 56,0
49,8 50,9 52,1 53,1
50 44,6 46,0 46,7 46,7 47,0 47,0 48,4 48,6
41,6 41,7 41,8 41,9 42,1 43,5 43,5 43,6
39,1 40,7
40 36,5 36,6 38,5
34,0 34,9
30 25,4
20
10
0
IE LT RO BG MT LV EE CZ PL ES SK LU NL SI PT CY DE HR HU EU EL EA IT AT SE DK BE FI FR
Euro Area Member States Non-Euro Area Member States Aggregates
Source: Eurostat.
Looking at the composition of public expenditure by COFOG categories, it can be noted that:
♦ Social protection, mainly including pensions, unemployment benefits and subsidies for sickness
and disability, constituted the major area of expenditures in the EU as a whole in 2018 (19.2% of
GDP); the individual figures ranged from 24.1% in Finland (followed by 23.9% in France) to 9.0%
in Ireland.
♦ The second highest share of government allocations, reaching 7.0% of GDP, is represented by
Health; at the national level, Denmark stood atop with 8.4%, while Cyprus closed the rank at 2.7%.
♦ General public services, accounted for 6.0% of the total EU: such expenditures refer to government
and parliament, fiscal affairs and public debt management, including interests on the debt, as well
as foreign affairs, including embassies and development and humanitarian aid. The EU MS with the
highest share of its GDP devoted to Public Services were Greece and Hungary (both with 8.3%), while
the lowest share was recorded in Ireland, with 3.1%.
♦ Education accounted for 4.6% of GDP in the EU: Sweden was the MS with the highest value (6.9%),
while Ireland and Romania recorded the lowest 3.2%.
♦ Allocations on Recreation and culture reached on average 1,1% across the EU. Such allocations
ranged from the highest value registered in Hungary, 3.2%, to the lowest value registered in Ireland,
with 0.5% of GDP.
♦ The Economic affairs category accounted for 4.4% of GDP in the EU. Allocations related to
transports, including spending on roads and railways, account for the major share of this item.
Cyprus and Ireland are at the extremes of the EU ranking, with the former presenting a share of
9.9% while the latter 2.3%.
♦ Public spending on Safety (including law courts and police) accounted for 1.7% of GDP in the
EU. Bulgaria topped the rank with 2.5%, followed by Latvia, Slovakia, Croatia, Hungary and
Romania registering figures between 2.2% and 2.4%. Denmark and Ireland, on the other hand,
displayed 0.9% and 1.0% respectively.
♦ Expenditures related to “Defence”, despite being relatively low, showed a spread ranging from the
highest value in Latvia at 2.1% of GDP, followed by Greece and Estonia both at 2.0%, to 0.3% of GDP
PE 634.371 3IPOL | Economic Governance Support Unit
in Ireland.
♦ Greece, Netherlands, Malta and Belgium were the only EU countries showing expenditures over 1.0%
in the “Environment” category, mainly concerning environmental protection and waste
management. The EU average for this function is 0.8%, with Finland settling at the lowest 0.2%.
♦ Lastly, 0.6% of GDP of the EU in 2018, on average, were directed to the public expenditure to the
“Housing” area.
Public expenditures from a “economic components” perspective
Public expenditures can also be decomposed according to an “economic components” perspective, i.e.
current expenditures and capital expenditure. More specifically, current expenditures include
compensation of employees; intermediate consumption; interests paid on public debt; and transfers (such
as social benefits, subsidies to business and grants to other governments). Capital expenditure mostly
consists of investments 5. Annex 2 presents detailed data for all the EU Member States.
Total transfers account for 25.2% of EU27 GDP, more than half of total public expenditure. Social
benefits constitute their most important components, accounting for 21.4% of GDP in the EU27 and
22.3% of GDP in EA.
In 2018, salaries of public employees accounted, on average, for 10.1% of GDP in the Member States,
ranging from 6.9% and 7.8% in Ireland and Germany, respectively, to 15.2% in Denmark. Most of salaries
are concentrated in Education (on average 3.0% of GDP both in the EU27 and in the EA), with the
highest and lowest percentages registered in Belgium (5.1%) and Romania (2.2%) respectively.
Health stood as the second function displaying the largest allocation for public salaries: 1.6% at the
EU27 level and 1.5% in the EA19, with percentages ranging from 0.2 in Luxemburg to 4.0 registered in
Denmark. These discrepancies reflect the deeply different structure of health care systems, as in some
countries health services are provided by the private sector (and then possibly reimbursed by the State),
while in others the system is publicly owned. Graph 3 shows how the share of expenditures for
compensation of employees in the health category varied among Member States.
Graph 3: Public expenditures: compensation of employees for Health, % of GDP in the EU – 2018
4,5 4,0
4,0
3,5
3,0 2,7 2,7 2,8 2,8 2,8
2,5 2,5 2,6 2,6
2,3
2,5 2,1 2,2 2,2
1,9 1,9
2,0 1,5 1,5 1,5 1,6 1,6
1,5 1,3 1,3 1,3
1,1
1,0
0,4
0,5 0,2 0,3 0,3
0,0
LU BE NL DE SK BG CY PL EA EL LV EU HU CZ EE IT LT RO FR IE AT PT SI ES HR MT FI SE DK
Euro Area Member States Non-Euro Area Member States Aggregates
Source: Eurostat.
5
In National Accounts (European System of Accounts) investments correspond to Gross Fixed Capital Formation. The indicator is said “gross”
because it includes the depreciation of assets (amortisation).
4 PE 634.371Composition of Public Expenditures in the EU Intermediate Consumption, which consists of goods and services consumed as inputs by the government’s production process (excluding fixed assets, whose consumption is recorded as consumption of fixed capital), represented 5.8% of GDP in EU27, where the highest functional share was held by Health (1.1%). Public Investments amounted to 3.9% of GDP in the EU27 and 3.8% in the EU19, with the highest category being Economic Affairs (1.5% both at EU27 and EA level) because this category mainly comprises transport and other network infrastructures. Interests expenditure amounted, on average, to 1.7% of EU27 GDP with the highest share registered in Italy (3.7%) and Portugal (3.4%), while the lowest was reported in Estonia and Luxembourg (0,0% and 0.3%). Differences among Member States and trends over time Data classified according to COFOG also enable to observe how the structure of public expenditures varies among EU Member States over time. Which are the categories with less variation (in terms of composition) among EU and Euro area Member States? Based on 2018 figures and own calculations (see Annex 3) Education stands as the category of public expenditures being the most homogenous both in the EA and in the EU. Housing, on the opposite, is the category showing the greatest divergences both in the EA and in the EU. The analysis also shows that the dispersion in the Euro area is lower than in the entire EU, albeit the general pattern is similar. Is it possible to identify convergent or divergent trends among Member States? Annex 4 compares the differences between the highest and the lowest values among the ten functions of expenditures in Euro area Member States in 2008 and in 2018. The analysis shows that such differences declined over time, with the exception of Social Protection, Health and Economic Affairs. For Social protection, the EU share of public expenditures increased in 2018, compared to 2008, passing from 17.9% of GDP to 19.2%, but with a greater dispersion in 2018 than ten years earlier. Furthermore, Social Protection is also the function exhibiting the largest increase in dispersion from 2008 to 2018. Public services, on the other hand, stands as the item experiencing the largest decrease in the average amounts allocated across the EU, which were 7.0% of GDP in 2008 and decreased to 6.0% in 2018. In addition, the allocations for this category are more homogeneous and similar across the EU than ten years earlier. Disclaimer and copyright. The opinions expressed in this document are the sole responsibility of the authors and do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the European Parliament is given prior notice and sent a copy. © European Union, 2020. Contact: egov@ep.europa.eu This document is available on the internet at: www.europarl.europa.eu/supporting-analyses PE 634.371 5
IPOL | Economic Governance Support Unit
Annex 1: Breakdown of cross-country expenditures per COFOG, Percentage of GDP, 2008-2018.
Public Economic Social
Function Defence Safety Environment Housing Health Culture Education
Services Affairs Protection
Year 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018
Belgium 8.7 7.1 1.1 0.8 1.8 1.7 6.1 6.6 1.0 1.3 0.4 0.3 7.3 7.6 1.2 1.3 5.7 6.2 17.5 19.3
Germany 6.6 5.7 0.9 1.1 1.5 1.6 3.7 3.4 0.5 0.6 0.7 0.4 6.5 7.2 1.1 1.1 3.9 4.2 18.8 19.4
Estonia 3.2 3.8 1.7 2.0 2.7 1.9 4.9 4.0 1.1 0.7 0.6 0.3 5.1 5.1 2.4 2.0 6.5 6.2 11.4 13.0
Ireland 3.8 3.1 0.4 0.3 1.7 1.0 5.2 2.3 1.1 0.4 1.6 0.5 6.9 5.0 0.8 0.5 4.7 3.2 15.5 9.0
Greece 11.4 8.3 3.0 2.0 1.6 2.1 5.7 4.4 0.9 1.3 0.3 0.2 6.5 5.0 0.7 0.8 3.8 3.9 17.0 19.0
Spain 5.2 5.6 1.0 0.9 2.0 1.8 5.5 4.1 1.0 0.9 1.1 0.5 6.1 6.0 1.6 1.1 4.2 4.0 13.8 16.9
France 7.2 6.2 1.7 1.8 1.5 1.7 4.6 5.8 0.9 1.0 1.2 1.1 7.4 8.1 1.4 1.4 5.4 5.1 21.8 23.9
Italy 9.5 7.9 1.3 1.3 1.8 1.8 3.9 3.8 0.8 0.8 0.6 0.5 7.0 6.8 0.7 0.8 4.3 4.0 18.0 20.8
Cyprus 8.6 7.0 1.6 1.9 1.9 1.7 3.4 9.9 0.3 0.3 2.4 1.5 2.7 2.7 1.2 0.8 6.0 5.2 10.2 12.5
Latvia 3.9 4.0 1.5 2.1 2.2 2.2 6.6 5.4 0.8 0.6 1.2 1.1 4.3 4.0 1.8 1.6 6.3 5.8 9.1 11.6
Lithuania 4.0 3.5 1.4 1.7 1.9 1.4 4.6 3.0 0.8 0.3 0.4 0.5 5.6 5.9 1.1 1.1 6.1 4.6 12.1 12.1
Luxembourg 4.9 5.1 0.3 0.5 0.9 1.1 4.5 5.2 1.1 0.9 0.7 0.6 4.4 4.7 1.2 1.3 4.8 4.6 16.8 18.0
Malta 7.3 5.2 0.6 0.5 1.4 1.2 6.7 5.5 1.5 1.2 0.7 0.4 5.3 5.3 0.6 1.0 5.2 5.2 13.3 10.9
Netherlands 5.7 4.2 1.2 1.2 1.8 1.8 4.3 3.8 1.5 1.4 0.5 0.3 6.6 7.6 1.4 1.2 5.2 5.1 14.7 15.5
Austria 7.2 5.9 0.9 0.6 1.3 1.3 6.3 5.9 0.5 0.4 0.4 0.3 7.5 8.2 1.3 1.2 4.8 4.8 19.6 20.1
Portugal 7.4 7.4 1.2 0.8 1.8 1.6 3.9 3.8 0.7 0.6 0.8 0.5 7.3 6.3 1.1 0.8 6.0 4.5 15.2 17.1
Slovenia 5.2 5.3 1.4 1.0 1.7 1.5 4.8 4.7 0.8 0.5 0.8 0.4 6.2 6.6 1.7 1.4 6.1 5.4 16.5 16.7
Slovakia 4.2 5.0 0.8 1.0 2.3 2.2 4.6 5.5 0.8 0.8 0.6 0.5 6.8 7.3 0.9 1.1 3.7 4.0 12.4 14.3
Finland 7.0 8.0 1.4 1.2 1.2 1.1 4.6 4.2 0.3 0.2 0.4 0.3 6.7 7.0 1.1 1.5 5.8 5.5 19.3 24.1
EA 7.1 6.1 1.2 1.2 1.6 1.7 4.5 4.3 0.8 0.8 0.8 0.6 6.8 7.1 1.2 1.1 4.6 4.5 18.1 19.6
Bulgaria 5.0 3.3 1.2 1.1 2.6 2.5 6.2 6.7 0.7 0.7 1.5 1.1 4.4 5.0 0.8 0.8 4.0 3.5 10.7 12.0
Czechia 4.3 4.5 1.0 0.9 1.9 1.9 6.7 6.0 0.9 0.9 0.9 0.8 6.9 7.6 1.4 1.5 4.7 4.6 11.9 12.0
Denmark 7.1 6.6 1.4 1.2 1.0 0.9 2.8 3.3 0.5 0.4 0.4 0.2 7.9 8.3 1.8 1.6 6.1 6.4 21.6 21.9
Poland 5.3 4.4 1.9 1.6 2.4 2.1 5.6 5.0 0.7 0.5 0.8 0.6 5.0 4.8 1.3 1.3 5.6 5.0 15.5 16.2
Sweden 7.9 7.1 1.5 1.2 1.3 1.3 4.3 4.3 0.5 0.5 0.6 0.7 6.6 7.0 1.3 1.3 6.4 6.9 20.0 19.5
Croatia 5.4 5.4 1.6 1.1 2.3 2.4 9.5 6.7 0.8 0.7 3.4 1.7 3.7 6.6 2.0 1.5 3.2 5.3 13.9 14.7
Hungary 9.4 8.3 1.0 0.9 2.0 2.3 5.8 7.7 0.6 0.4 0.9 0.7 4.9 4.7 1.5 3.2 5.3 5.1 17.4 13.3
Romania 4.6 4.6 1.4 1.7 2.1 2.2 7.8 4.2 0.5 0.8 1.3 0.9 3.6 4.7 1.1 1.0 4.3 3.2 11.0 11.6
EU27 7.0 6.0 1.3 1.2 1.7 1.7 4.6 4.4 0.8 0.8 0.8 0.6 6.7 7.0 1.2 1.1 4.7 4.6 17.9 19.2
Note - Green highlights denote the lowest and yellow highlights the highest values for every function
Source: Eurostat.
6 PE 634.371Composition of Public Expenditures in the EU
Annex 2: Breakdown of expenditure by economic component, percentage of GDP, 2008 and 2018
Compensation of Intermediate Gross Capital
Component Transfers Interest Total
employees Consumption Formation
Year 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018 2008 2018
Belgium 11.9 12.3 28.8 30.2 3.9 4.1 4.0 2.1 3.4 3.4 52.0 52.1
Germany 7.5 7.8 27.6 27.2 4.3 5.1 2.7 0.9 3.6 3.6 45.7 44.6
Estonia 11.0 11.3 15.3 15.6 6.4 6.4 0.2 0.0 7.4 5.8 40.3 39.1
Ireland 11.3 6.9 18.5 11.0 5.3 3.4 1.3 1.6 7.0 2.5 43.4 25.4
Greece 11.6 11.8 22.3 23.3 6.4 4.6 4.8 3.3 7.2 3.9 52.3 46.9
Spain 10.6 10.6 19.0 20.5 5.4 5.2 1.6 2.4 6.0 3.1 42.6 41.8
France 12.4 12.5 28.9 31.7 5.1 5.4 2.9 1.7 5.2 4.7 54.5 56.0
Italy 10.5 9.8 23.4 25.3 5.9 6.3 4.9 3.7 4.3 3.4 49.0 48.5
Cyprus 13.2 11.7 15.1 15.3 4.3 3.8 2.6 2.4 4.1 10.3 39.3 43.5
Latvia 11.4 10.3 14.5 15.9 6.3 5.6 0.5 0.7 5.2 5.9 37.9 38.4
Lithuania 10.6 9.8 15.8 15.5 5.6 4.4 0.7 0.9 5.9 3.5 38.6 34.1
Luxembourg 8.3 8.9 23.9 24.2 3.5 3.6 0.4 0.3 4.8 5.1 40.9 42.1
Malta 13.8 11.1 16.7 13.1 6.5 6.6 3.3 1.6 3.0 4.3 43.3 36.7
Netherlands 8.3 8.3 22.5 23.2 6.4 6.0 2.0 0.9 4.3 3.7 43.5 42.1
Austria 10.6 10.4 26.1 26.2 6.7 6.7 2.9 1.6 4.5 3.7 50.8 48.6
Portugal 13.1 10.7 20.7 20.9 5.5 5.4 3.1 3.4 3.8 3.1 46.2 43.5
Slovenia 11.0 11.1 21.8 20.2 6.3 6.3 1.1 2.0 5.9 4.1 46.1 43.7
Slovakia 7.5 9.3 19.8 21.3 5.0 5.7 1.3 1.3 4.2 4.2 37.8 41.8
Finland 12.8 12.3 21.0 24.8 9.2 10.9 1.4 0.9 4.0 4.3 48.4 53.2
EA 10.1 9.9 25.0 26.0 5.3 5.5 3.0 1.8 4.6 3.8 48.0 47.0
Bulgaria 8.8 9.5 15.3 17.5 6.9 4.8 0.8 0.6 5.7 4.0 37.5 36.4
Czechia 8.3 9.8 18.9 18.9 7.1 6.2 1.0 0.8 6.6 5.0 41.9 40.7
Denmark 15.6 15.2 21.8 22.0 8.7 8.8 1.4 1.1 3.6 3.9 51.1 51.0
Poland 10.8 10.2 20.4 19.0 6.4 5.8 2.1 1.4 5.4 5.1 45.1 41.5
Sweden 12.5 12.7 20.8 20.5 11.0 10.9 1.7 0.7 4.4 5.2 50.4 50.0
Croatia 11.2 11.6 19.3 18.7 7.3 8.1 1.8 2.3 7.7 5.4 47.3 46.1
Hungary 11.3 10.5 23.2 18.3 7.1 7.6 4.1 2.4 4.6 7.8 50.3 46.6
Romania 10.0 10.9 14.2 13.7 6.3 5.1 0.7 1.2 7.5 4.0 38.7 34.9
EU27 10.3 10.1 23.1 25.2 5.7 5.8 2.8 1.7 4.7 3.9 46.6 46.7
Note - Green highlights denote the lowest and yellow highlights the highest values for every component
Source: Eurostat.
PE 634.371 7IPOL | Economic Governance Support Unit
Annex 3: Dispersion of composition of public expenditure among
EU27 and Euro area Member States, 2018
In order to analyse the distribution of public spending among Member States, this note makes use of the
coefficient of variation (CV)6, as it best captures the variation of a distribution, taking into account its average.
Graph 4 depicts the dispersion of each category of public spending in the EU as a whole and in the EA.
It shows overall lower dispersion of expenditures in the Euro Area compared to the entire Union. The
lower the value of the CV indicator for each category, the more similar is the expenditure allocation
among Member States. Therefore, Education stands as the category of public expenditures being the
most homogenous (less dispersed) both in the EA and in the EU (0.17 and 0.20 respectively).
Within both aggregates, Health, Public Services and Social protection appear to be the areas where
countries’ public spending resulted the most aligned. On the other hand, considering the Euro area,
Housing and Environment stand out as the categories showing the highest divergences. The difference
in the coefficients of variations between Euro Area and EU27 is maximum in culture, where the Euro
Area Member States are considerably more aligned for this function’s expenditure.
Graph 4: Coefficient of variation of public expenditures in EU and EA in 2018
0,7
0,6
Standard Deviation/Average
0,5
0,4
0,3
0,2
0,1
0
CV EU CV EA
Source: EGOV on Eurostat data
6
The coefficient of variation (CV) is a pure number, obtained as the ratio between the standard deviation and the arithmetic mean. Compared
to the standard deviation, the CV mitigates possible distortion due to the magnitude of the values in a distribution.
8 PE 634.371Composition of Public Expenditures in the EU Annex 4: Variation over time. Divergence or convergence across Member States? In order to gather information on possible trends of convergence or divergence among EU Member States regarding the composition of public spending, Graph 5 provides a representation of public expenditures shares in 2008 (blue) and in 2018 (red). For each item, the graph shows the maximum and minimum values registered in the two years, wherein the size of the circle is proportional to the value of the coefficient of variation. Furthermore, the position of the red circle (representing the EU27 average in 2008) compared to the position of the blue circle (2018) embodies the upwards or downwards variation of the median amount spent in EU27 countries. At first sight, the differences between the highest and the lowest value among the ten functions of expenditures declined, with the exception of Social Protection, Health and Economic Affairs. Nevertheless, it can be stated that, although to a diverse extent, most functions appear to have followed a convergent path from 2008 to 2018. It can be noted that the three above-mentioned items that did not experience such trend, but showed signs of divergence instead, stand among the functions featuring, on average, the largest share of public spending. Graph 5: Comparison of COFOG categories, average in 2008 and in 2018 in EU27 Member States Source: EGOV on Eurostat data; for representation purposes, some categories are merged For Social Protection the graph shows that in the EU27 the share of public expenditures increased in 2018, compared to 2008, from 17.9% of GDP to 19.2%. As the size of the circles is proportional to the CVs, graph 5 shows that in 2008 the share of expenditures devoted to this function in the Member States was more homogenous than in 2018. In addition, in 2018 the difference between the maximum and minimum share in the EU27 was bigger than in 2008. Thus, both indicators point towards a greater dispersion in 2018 than ten years earlier, suggesting a diverging trend among EU27 countries’ allocations on Social protection. Economic affairs is the function exhibiting the largest increase in dispersion from 2008 to 2018, with the highest expansion of the coefficient of variation over the ten-year span among all the categories: the red circle is bigger than the blue one, signaling a CV in 2018 higher than 0.30, while in 2008 it was 0.27. Furthermore, against a lower average in 2018 compared to 2008, the range has increased. Public services, on the other hand, stands as the item experiencing the largest decrease in the average amounts allocated across the EU27, which were 7.0% of GDP in 2008 and decreased to 6.0% in 2018. Moreover, the gap between the maximum and minimum values registered in the two years dropped significantly from 8.2% in 2008 to 5.2 % in 2018, as well as the CV. Therefore, the allocations for this category are more homogeneous and similar across the EU27 than ten years before. Education and culture, as an aggregate, experienced a slight downwards shift of the average in 2018 compared to 2008. PE 634.371 9
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