General government
expenditure and revenue in
the EU in 2004
Statistics
In the framework of the ESA 95 transmission programme, European
Union Member States have reported their provisional general
in focus
government expenditure and revenue data for 20041.
Total government expenditure in the EU-252 decreased in 2004 to an
estimated 48.1% of GDP, from 48.5% in 2003. Meanwhile there was a
slight fall in revenue to 45.5% of GDP, from 45.6% in the previous
ECONOMY AND FINANCE
year. The general government deficit (more precisely, net borrowing
according to the ESA 95 classification) therefore narrowed to 2.6% of
24/2005 GDP, from 2.9% in 2003.
Author eurozone
Ivana JABLONSKA
EU15
EU25
eurozone
EU15
Contents
EU25
Government revenue and
expenditure totals by country...... 2
40 42 44 46 48 50
Main components of government
Total general government expenditure Total general government revenue
expenditure ................................. 2
Main components of government
Figure 1: Total government revenue and expenditure (% of GDP)
revenue ....................................... 4
Government deficit and net saving.. 6
For the euro-zone3, both government expenditure and to a lesser
extent government revenue are higher than in the EU-25 (as % of
GDP). Government expenditure in the euro-zone fell to 48.6% of GDP
in 2004, from 49.1% in 2003. Revenue, meanwhile, declined from
46.3% of GDP to 45.8%, so the deficit was unchanged at 2.8% of
GDP4.
1
Commission Regulation (EC) No 1500/2000 implementing Council Regulation (EC) No 2223/96.
Reporting of European System of Accounts (ESA 95) transmission table 2 by Member States to
Eurostat is at t+3 and t+8 months. These data correspond to the end-March 2005 transmission.
2
Data for EU-25 in 2004 excludes Poland (not available). Poland accounted for 1.9% of EU GDP
at market prices in 2004.
Manuscript completed on: 08.08.2005
3
Data extracted on: 30.05.2005 Euro-zone comprises Belgium, Germany, Greece (from 1.1.2001), Spain, France, Ireland, Italy,
ISSN 1024-4298
Luxembourg, the Netherlands, Austria, Portugal, and Finland.
Catalogue number: KS-NJ-05-024-EN-N
4
The deficit differs slightly from that reported at t+2 months under the Excessive Deficit
© European Communities, 2005
Procedure (see Eurostat news release 39/2005, 18th March 2005).
2004
2003
Government revenue and expenditure totals by country
Millions of euro, 2004 % of GDP, 2004 % of GDP, 2003
Total general Total general Total general Total general Total general Total general
government government government government government government
revenue expenditure revenue expenditure revenue expenditure
EU25 : : 45.5 48.1 45.6 48.5
EU15 4 440 022 4 692 956 45.8 48.2 45.8 48.5
eurozone 3 465 386 3 673 627 45.8 48.6 46.3 49.1
BE 139 922 139 977 49.3 49.3 51.3 51.0
CZ 35 821 38 423 41.5 44.5 41.6 53.2
DK 114 431 109 458 58.9 56.3 57.5 56.4
DE 953 630 1 033 930 43.8 47.5 45.0 48.8
EE 3 472 3 317 39.0 37.3 38.9 35.8
EL 75 973 85 916 46.0 52.0 44.9 50.1
ES 321 235 323 619 40.2 40.5 40.0 39.6
FR 825 749 886 054 50.1 53.8 49.5 53.6
IE 52 066 50 097 35.6 34.3 34.6 34.4
IT 613 615 655 541 45.4 48.5 46.3 49.3
CY 4 927 5 454 39.7 44.0 39.1 45.4
LV 3 927 4 010 35.5 36.2 34.2 35.7
LT 5 775 6 218 32.2 34.7 32.2 34.1
LU 11 508 11 789 44.9 46.0 45.5 45.1
HU 36 010 39 484 44.8 49.2 43.5 49.8
MT 1 859 2 085 42.9 48.1 39.7 50.3
NL 215 658 226 451 46.2 48.6 45.8 49.0
AT 116 030 119 053 49.4 50.7 49.5 50.8
PL : : : : 44.3 48.1
PT 61 366 65 351 45.4 48.4 44.6 47.6
SI 11 882 12 373 45.9 47.8 46.2 48.2
SK 14 795 15 891 44.7 48.0 35.4 39.2
FI 78 635 75 849 52.5 50.7 52.9 50.8
SE 162 768 159 357 58.4 57.2 58.6 58.7
UK 697 438 750 514 40.8 43.9 40.0 43.3
Table 1: Government revenue and expenditure totals by country
Table 1 shows the size of the general government consolidated basis. In the following countries D.4 is
sector in each country in terms of its revenue and not consolidated: Czech Republic (2003),
expenditure. Relative to GDP, using a combined Denmark, Austria, Poland, Slovenia, and Sweden.
measure (adding together the revenue and In the 2004 data of Slovakia D.7 is not
expenditure of each country), Sweden has the consolidated. The effect of consolidation is very
largest government sector in the EU, followed by apparent in the data of Slovakia, where the
Denmark. The government sector is smallest in revenue and expenditure reported for 2004 (44.7%
Lithuania, followed by Ireland. and 48.0% of GDP respectively) are much higher
than for 2003.
It should be noted that, for the main transactions
taking place between entities classified within the Another big difference between the data for 2004
government sector - property income (ESA code and 2003 concerns government expenditure in the
D.4), current transfers (D.7), capital transfers (D.9) Czech Republic. The relatively high figure for
- the data are consolidated. In other words, such spending in 2003 (53.2% of GDP) is not only due
transactions are excluded from the revenue and to incomplete consolidation of intra-government
expenditure figures shown. However, for several transactions but is also related to exceptional
countries the data are overstated as a result of transfers from government to financial and non-
recording some of these transactions on a non- financial corporations.
Main components of government expenditure
ESA 95 transmission programme table 2 ( Main The relative importance of general government
aggregates of general government ) provides a expenditure items varies considerably according to
breakdown of transactions in expenditure and the country.
revenue according to the ESA 95 classification.
2 Statistics in focus Economy and finance 24/2005
100%
other
90%
Gross fixed capital
80%
formation
70%
Social transfers in
kind = expenditure on
60%
products supplied to
households via
market producers
50%
Social benefits other
than social transfers
in kind
40%
Interest
30%
20%
Compensation of
employees
10%
Intermediate
0%
consumption
Figure 2: Main expenditure components for 2004 (PL 2003) as a percentage of total expenditure
Nevertheless, it is evident from figure 2 that social categories D.4, D.7, and D.9 are consolidated.
welfare spending is very significant in all countries.
In the EU-25, in 2004 the most important category
These are classified under social benefits other
of general government expenditure was social
than social transfers in kind (ESA 95 category
benefits other than social transfers in kind ,
D.62) and social transfers in kind related to
accounting for 34.1% of total spending. This was
expenditure on products supplied to households
followed by compensation of employees (22.6%),
via market producers (D.6311+D.63121+
then intermediate consumption (13.2%).
D.63131). Typically these payments cover risks or
needs such as sickness, disability, old age, and
For the euro-zone, however, the third most
unemployment.
important category of expenditure was social
transfers in kind related to expenditure on products
Other major expenditure items are compensation
supplied to households via market producers . The
of employees (D.1), comprising wages and
difference between the EU-25 and euro-zone
salaries and employers social contributions (actual
aggregates in this respect is partly explained by
and imputed). Intermediate consumption (P.2)
the treatment of social transfers in kind in the
refers to the value of goods and services
figures of the UK. In fact, for Greece and Cyprus
consumed as inputs by a process of production,
as well as for the UK, the category social transfers
excluding fixed assets. Figure 2 also shows
in kind related to expenditure on products supplied
interest (D.41) payable on government debt, and
to households via market producers does not
gross fixed capital formation (P.51), which
appear because the amounts have been classified
essentially refers to the net acquisition of fixed
under intermediate consumption (these countries
assets. The other category of expenditure
are not yet able to separately identify these flows).
consists mainly of subsidies (D.3), other current
A breakdown of government expenditure by
transfers (D.7), and capital transfers (D.9). It
reporting EU Member State is shown in table 2.
should be recalled that the data reported in
________________________________________________
24/2005 Economy and finance Statistics in focus 3
IT
FI
IE
SI
LT
EL
LV
PL
LU
NL
AT
PT
CZ
FR
BE
EE
ES
SK
SE
DK
DE
CY
UK
HU
MT
EU25
EU15
euro-zone
Social benefits other
Intermediate Compensation of Social transfers in Gross fixed capital
Interest than social transfers Other Total
consumption employees kind formation
in kind
EU25 ::::::::
EU15 619,834 1,059,806 300,425 1,608,280 415,749 236,236 452,626 4,692,956
eurozone 370,850 802,789 250,743 1,295,565 404,527 193,732 355,422 3,673,627
BE 9,388 33,724 13,849 45,364 20,608 4,284 12,761 139,977
CZ 5,817 6,885 1,085 10,191 5,067 3,747 5,632 38,423
DK 17,475 34,562 6,182 32,781 2,764 3,634 12,061 109,458
DE 84,910 166,360 66,160 423,310 165,220 30,610 97,360 1,033,930
EE 685 904 23 910 184 290 320 3,317
EL 10,209 20,585 9,313 30,862 0 6,793 8,154 85,916
ES 38,511 82,781 17,530 97,675 22,216 29,185 35,721 323,619
FR 89,929 222,451 46,439 298,833 98,417 54,384 75,601 886,054
IE 8,906 12,761 1,724 13,423 2,460 5,228 5,596 50,097
IT 66,755 148,248 68,960 234,181 36,302 34,875 66,220 655,541
CY 547 1,929 419 1,438 5 484 633 5,454
LV 976 1,166 86 972 73 222 515 4,010
LT 1,019 1,903 184 1,602 235 580 695 6,218
LU 916 2,213 61 4,024 1,435 1,284 1,856 11,789
HU 5,187 9,515 3,452 11,515 2,317 2,720 4,779 39,484
MT 223 657 177 572 26 189 239 2,085
NL 32,172 50,318 12,939 57,293 39,521 15,811 18,397 226,451
AT 10,553 22,302 7,063 45,269 11,339 2,500 20,027 119,053
PL 12,038 22,072 5,792 32,613 6,671 6,355 3,643 89,184
PT 5,108 20,312 3,864 20,156 4,015 4,480 7,417 65,351
SI 1,757 3,139 482 4,387 534 727 1,348 12,373
SK 2,441 2,961 730 3,461 1,052 833 4,413 15,891
FI 13,492 20,734 2,841 25,175 2,995 4,299 6,313 75,849
SE 27,653 46,069 5,563 50,009 8,459 8,416 13,187 159,357
UK 203,856 176,386 37,937 229,925 0 30,454 71,957 750,514
Table 2: Main expenditure components for 2004 (PL 2003) in million euro
Main components of government revenue
Compulsory levies in the form of taxes and social capital taxes (D.91), and social contributions
contributions accounted for around 90% of general (D.61).
government revenue in the EU in 2004. In figure 3, Taxes on production and imports refers mainly to
compulsory levies are split into the following ESA value-added tax, import and excise duties, taxes
95 categories: taxes on production and imports on financial and capital transactions, on land and
(D.2), current taxes on income, wealth, etc. (D.5), buildings, on payroll, and other taxes on products
100%
other
90%
80%
Capital taxes, receivable
70%
60%
Social contributions,
receivable
50%
Current taxes on income,
40%
wealth, etc., receivable
30%
Taxes on production and
imports, receivable 20%
10%
Market output, output for
own final use and
payments for other non- 0%
market output
Figure 3: Main revenue components for 2004 (PL 2003) as a percentage of total revenue
4 Statistics in focus Economy and finance 24/2005
IT
FI
IE
SI
LT
EL
LV
PL
LU
NL
AT
PT
BE
CZ
EE
ES
FR
SK
SE
DK
DE
CY
UK
MT
HU
EU25
EU15
euro-zone
and production. In the category current taxes on grants (D.92+D.99). The data for D.4, D.7 and D.9
income, wealth, etc. are taxes on income and on are consolidated.
holding gains of households and corporations,
Social contributions account for 31.4% of total
current taxes on capital, taxes on international
government revenue in the EU, followed by taxes
transactions, and payments for licences.
on production and imports (30.2%), and current
taxes on income, wealth, etc. (28.3%). The
The term capital taxes is used in ESA 95 in the
importance of social contributions is even greater
restricted sense of taxes levied at irregular and
in the euro-zone (34.9% of total revenue), partly
infrequent intervals on the value of assets or net
explained by Germany where 41.6% of revenue is
worth owned, or transferred in the form of legacies
in this category. At the other extreme is Denmark,
or gifts.
where social contributions account for just 4.6%
of government revenue, as the social security
Social contributions cover actual amounts
system is mostly funded by income tax (the
receivable from employers and employees, and
category current taxes on income, wealth, etc. is
also imputed amounts (see ESA 95 paragraphs
correspondingly the highest in the EU, at 51.4% of
4.98 - 4.102 for an explanation of imputed social
total revenue).
contributions).The remainder of government
revenue shown in figure 3 is in the form of market
A breakdown of government revenue by reporting
output, output for own final use and payments for
EU Member State is shown in The other
other non-market output (P.11+P.12+P.131), and
government revenue category reported by the UK
other revenue, the main components of which are
for 2004 is overstated by 0.1% of GDP because of
property income (D.4), other current transfers
non-compliance with Eurostat s decision on UMTS
(D.7), and other capital transfers and investment
(mobile phone) licences4.
Market output, output
for own final use and Taxes on production Current taxes on
Social contributions Capital taxes Other Total
payments for other non- and imports income, wealth, etc.
market output
EU25 :::::: :
EU15 222 555 1 336 402 1 263 860 1 393 757 37 758 185 690 4 440 022
euro-zone 169 270 1 027 921 883 155 1 208 563 32 852 143 625 3 465 386
BE 4 048 37 274 48 279 45 711 2 183 2 427 139 922
CZ 2 480 10 250 8 075 13 034 27 1 955 35 821
DK 6 386 34 042 58 807 5 254 403 9 538 114 431
DE 39 910 259 530 221 990 396 450 4 290 31 460 953 630
EE 222 1 158 769 1 002 0 320 3 472
EL 2 797 23 664 14 640 26 974 279 7 619 75 973
ES 9 673 98 657 85 549 108 652 3 434 15 270 321 235
FR 59 657 253 886 183 012 296 698 9 541 22 955 825 749
IE 1 948 19 317 18 235 9 008 202 3 356 52 066
IT 18 578 195 207 185 377 174 756 10 721 28 976 613 615
CY 327 2 003 1 144 1 055 13 386 4 927
LV 275 1 242 965 994 0 451 3 927
LT 232 2 009 1 582 1 576 1 374 5 775
LU 564 3 851 3 569 3 125 40 360 11 508
HU 2 177 13 216 7 453 11 081 67 2 016 36 010
MT 96 666 520 362 9 205 1 859
NL 16 577 61 167 51 734 73 224 1 516 11 440 215 658
AT 4 807 34 272 31 632 38 521 154 6 643 116 030
PL 13 876 28 386 13 300 26 120 40 346 82 067
PT 3 293 20 249 12 477 17 491 19 7 838 61 366
SI 795 4 256 2 218 3 921 16 677 11 882
SK 911 4 218 1 844 4 156 3 3 663 14 795
FI 7 420 20 847 26 662 17 952 472 5 282 78 635
SE 12 655 47 313 53 669 41 392 280 7 460 162 768
UK 34 244 227 126 268 229 138 550 4 223 25 067 697 438
Table 3: Main revenue components for 2004 (PL 2003) in million euro
çÅ‚çÅ‚çÅ‚çÅ‚çÅ‚çÅ‚çÅ‚çÅ‚çÅ‚çÅ‚çÅ‚
4
Eurostat decision No 81/2000: sales of UMTS licences should be recorded as disposals of non-financial non-produced assets (K.2 in the ESA
95 classification).
________________________________________________
24/2005 Economy and finance Statistics in focus 5
Government deficit and net saving
As already mentioned, the difference between (positive or negative) amount resulting from current
general government expenditure and revenue transactions which establishes the link with
results in a surplus or deficit, known in the ESA 95 accumulation. In the ESA 95 sequence of
methodology as 'general government net lending accounts, it is the balance in current transactions
/net borrowing' (ESA 95 category B.9). It can be before taking into account capital transactions
seen in figure 4 that the net borrowing of the EU- (capital transfers and net acquisitions of non-
25 decreased in 2004 to 2.6% of GDP, from 2.9% financial assets). Negative net saving (or 'dis-
in the previous year. In the euro-zone the net saving') in 2004 fell to 1.3% of GDP, from 1.6% in
borrowing remained equal to 2.8% of GDP. 2003, in both the EU-25 and the euro-zone. A
negative net saving balance requires governments
Also shown in figure 4 is the concept of 'net saving'
to borrow and /or to sell assets.
(ESA 95 category B.8n). This is defined as the
eurozone
EU15
EU25
eurozone
EU15
EU25
-3.5 -3.0 -2.5 -2.0 -1.5 -1.0 -0.5 0.0
Net saving Net lending (+) /net borrowing (-)
Figure 4: General government deficit and net saving (% of GDP)
Table 4 shows, for each reporting country, its net Also, the accounting treatment of swaps and
saving and net lending/net borrowing position. Net forward rate agreements differs under the EDP
lending/net borrowing in particular is seen as an than in national accounts. For the purpose of EDP
important measure of government finances. It is reporting, net lending/net borrowing includes
used, for example, as the definition of government streams of interest payments resulting from swap
deficit/surplus for the reporting of EU Member and forward rate agreements. For most countries,
States under the Excessive Deficit Procedure however, this methodological difference has little
(EDP). or no impact on the data.
It should be noted that figures presented here may Using the net saving measure rather than net
differ from those reported under the EDP because lending/net borrowing, quite a different picture of
of a difference in time of reporting. EDP data for government finances emerges in many countries.
the previous year's outcome (in this case, 2004) For example, in 2004 the general government
are first notified to the European Commission at financial position in Greece and Cyprus are much
t+2 months, whereas table 2 of the national closer to balance, while that of Spain and
accounts (ESA 95) transmission programme is first Luxembourg turns positive. For most countries, the
reported at t+3 months. Revisions may occur in the government financial position looks stronger in
intervening period because of the provisional both 2003 and 2004 when measured by net saving
nature of the data. rather than by net lending/net borrowing.
6 Statistics in focus Economy and finance 24/2005
2004
2003
Millions of euro, 2004 % of GDP, 2004 % of GDP, 2003
Net lending (+) Net lending (+) Net lending (+)
Net saving Net saving Net saving
/net borrowing (-) /net borrowing (-) /net borrowing (-)
EU25 : : -1.3 -2.6 -1.6 -2.9
EU15 -123 286.7 -252 933.1 -1.3 -2.6 -1.5 -2.8
eurozone -99 365.3 -208 240.8 -1.3 -2.8 -1.6 -2.8
BE -946.3 -55.2 -0.3 0.0 -0.9 0.3
CZ -732.4 -2 602.0 -0.8 -3.0 -3.1 -11.6
DK 4 208.3 4 973.1 2.2 2.6 0.7 1.0
DE -61 000.0 -80 300.0 -2.8 -3.7 -2.7 -3.8
EE 307.5 155.0 3.5 1.7 5.6 3.1
EL -2 485.0 -9 943.0 -1.5 -6.0 -0.5 -5.2
ES 24 055.0 -2 384.0 3.0 -0.3 2.8 0.4
FR -39 534.0 -60 305.0 -2.4 -3.7 -2.9 -4.1
IE 5 277.0 1 969.5 3.6 1.3 3.0 0.2
IT -19 260.0 -41 926.0 -1.4 -3.1 -1.9 -3.0
CY -91.2 -526.4 -0.7 -4.2 -2.9 -6.3
LV -90.7 -82.7 -0.8 -0.7 -2.2 -1.5
LT 71.9 -443.6 0.4 -2.5 0.5 -1.9
LU 863.0 -281.8 3.4 -1.1 4.2 0.5
HU -3 397.8 -3 474.4 -4.2 -4.3 -5.5 -6.2
MT -238.2 -225.9 -5.5 -5.2 -5.5 -10.6
NL -6 193.0 -10 793.0 -1.3 -2.3 -2.0 -3.2
AT 2 171.2 -3 022.9 0.9 -1.3 0.4 -1.3
PL : : : : -1.7 -3.8
PT -5 628.2 -3 985.3 -4.2 -3.0 -3.4 -3.0
SI 125.3 -490.7 0.5 -1.9 0.5 -2.0
SK -1 109.6 -1 096.1 -3.4 -3.3 -4.2 -3.7
FI 3 315.0 2 786.0 2.2 1.9 2.5 2.1
SE 4 931.0 3 411.2 1.8 1.2 0.6 -0.1
UK -33 060.7 -53 076.7 -1.9 -3.1 -2.0 -3.3
Table 4: General government net lending (+)/net borrowing (-) and net saving by country
________________________________________________
24/2005 Economy and finance Statistics in focus 7
Further information:
Databases
EUROSTAT Website/Economy and finance/Government statistics/Main aggregates of general government,
including total revenue and expenditure
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Text written in collaboration with Sheldon Warton-Woods.
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