Tuesday

9th Aug 2022

Greece and Slovenia lead on public spending cuts

  • Slovenia post box (Photo: EUobserver)

Greece and Slovenia slashed public spending by over 10 percent in 2014, easily the largest falls across the EU, the bloc's statistical agency has revealed.

Government spending as a proportion of economic output fell to 48.1 percent in 2014, a 0.5 percent fall on the previous year, according to figures published on Tuesday (7 July) by Eurostat.

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Between them the EU’s 28 governments spent €6.7 trillion in total in 2014. Over 40 percent of state spending is on social protection, covering welfare schemes such as pensions, sickness and unemployment benefits, while health and education spending account for 15 percent and 11 percent, respectively.

Finland, France, and Denmark have the bloc’s biggest spending governments, splashing out between 57 and 59 percent of their national GDP, compared to the 35 percent of GDP spent by Romania and Lithuania.

The figures demonstrate the widening gap between the EU's rich and poor countries, but also the different cultural attitudes towards the role of government in providing services across the bloc.

They also give an indication of why European peoples are so divided in their attitudes towards budgetary austerity.

Traditionally, the Nordic countries are well-known for combining high-tax rates with high quality and efficient welfare systems, while former eastern bloc countries, particularly the Baltic states of Estonia, Latvia, and Lithuania have the lowest levels of state spending.

While most governments recorded a slight fall in spending, Greece and Slovenia slashed theirs by 10.7 percent and 9.9 percent, respectively, dropping them down from the top to the middle of the EU spending charts.

They spent 49 percent and 49.8 percent of GDP in 2014, just marginally above the EU average.

Both countries have made painful budget cuts in a bid to stave off financial crises, although Greece has been thrown into new turmoil this year after negotiations with creditors on its bailout agreement collapsed.

For its part, Cyprus recorded the largest increase, at 7.7 percent, in state spending.

However, despite imposing deep cuts, Greece still has one of the highest pensions bills in the EU, with nearly a quarter of Greek government spending being allocated to pensions, according to Eurostat.

Increasing the retirement age and individual contributions to pension schemes has been one of the items causing greatest controversy in the long-running negotiations between Greece and its EU/IMF creditors.

Denmark and Sweden spend around €26,000 and €23,000 per person, comfortably the highest in the EU, and around ten times as much as the €2,600 and €2,300 spent by Romania and Bulgaria.

The Greek government spends an average of €8,039 per year on each citizen, compared to an EU average of €13,153.

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