Public spending in Europe is significantly influenced by tax revenues, which constitute an important share of public income. These revenues are essential for financing public services such as education, healthcare, and social support. But where does this spending go, and how do governments allocate these resources? In 2024, tax revenues accounted for 40.3% of GDP in the European Union, while total public spending exceeded this rate, reaching 49.6% of GDP.
Significant Share of Social Support
In the European Union, 19.6% of GDP is spent on social support, which makes up 40% of total government spending. In other words, two euros out of every five euros of public spending in the European Union are allocated to social support. Social support is designed to protect individuals against risks arising from unemployment, parental responsibilities, illness, disability, loss of a spouse or parent, aging, housing, and social exclusion. Pensions constitute the largest portion of social support benefits, accounting for nearly half of the total.
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Other Spending Sectors
Overall, among 31 countries, including the European Union, the UK, Norway, Switzerland, and Iceland, social support has the largest share of government spending in each country, ranging from 26% in Hungary to 45.9% in Finland. In countries like Luxembourg, Italy, Denmark, France, and Germany, the share of social support is above 40%. In the UK, as reported by the OECD, this share is 34.5%.
The report from the European Central Bank, prepared by Marta Rodríguez-Viuss and Linda Kazbere, emphasizes that there is no optimal level of social spending for all countries. This report points to significant differences in pension systems across Eurozone countries. This wide gap reflects the different priorities of governments in their spending and policies.
Healthcare spending on average constitutes the second largest portion of government spending in the European Union, accounting for 15% of total expenditures. However, in some countries, other categories rank second. For example, in Italy and Hungary, this share is lower.
Overall, the combination of social support and healthcare spending exceeds 50% in two-thirds of countries. In the major economies of the European Union, this ratio remains above the Union average. However, in Hungary and Malta, this share is below 40%. Additionally, public spending on public services, economic affairs, and education averages around 10% in the European Union.
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