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74-452: The Road Fund is notable as one of the few beneficiaries of hypothecated taxation in British history, and is the root of a popular misconception that Vehicle Excise Duty (especially when referred to as road tax ) is still hypothecated. Between 1920 and 1936 the vehicle licence (tax disc) was officially known as the "Road Fund Licence", a term which is still in common use today. The origins of

148-652: A long history. One of the first examples of earmarking was ship money , the tax paid by English seaports used to finance the Royal Navy . Later, in the 20th century, the hypothecated tax began to be discussed by politicians in the United Kingdom. For example, the Vehicle Excise Duty from 1920 when earned revenues were used for the construction and maintenance of the roads, assigning 1p on the income tax directly to education in 1992, or giving £300 million per year from

222-491: A lot by the war, the share of public expenditure even exceeded 25 percent. In interwar period the average share of the public expenditure was still slightly increasing. The United States increased its public expenditure with the New Deal. Other governments also increased public expenditure to create more employment. The increase was accelerated by World War II anticipation in the second part of the 30s among European countries. In 1937

296-457: A small amount of central government expenditure, and the great majority of work trips by officials are undertaken at standard or economy class, the UK's National Audit Office has noted that this is an aspect of expenditure attracting high levels of public interest. In 2010 national governments spent an average of $ 2,376 per person, while the average for the world's 20 largest economies (in terms of GDP)

370-421: A system of funding through government grants. Hypothecation (taxation) The hypothecation of a tax (also known as the ring-fencing or earmarking of a tax ) is the dedication of the revenue from a specific tax for a particular expenditure purpose. This approach differs from the classical method according to which all government spending is done from a consolidated fund . Hypothecated taxes have

444-405: A total per person spending including national, state, and local governments was $ 22,726 in the U.S. This is a list of countries by government spending as a percentage of gross domestic product (GDP) for the listed countries, according to the 2014 Index of Economic Freedom by The Heritage Foundation and The Wall Street Journal . Tax revenue is included for comparison. These statistics use

518-498: A variety of sources to finance public-sector expenditures. They are not in control of the currency that their jurisdiction transacts in and so are restricted by what revenue they can raise prior to executing spending policies. Currency-issuing governments have no such nominal fiscal restriction. They have an infinite fiscal capacity in that, in principle, they can issue as much of their own currency as they like. However, real resources and productive capacity within an economy are finite. It

592-442: A vehicle licence (tax disc) as visible evidence of having paid the tax. Road locomotives were subject to a separate 'wetted tax', where the fee was proportional to the size of the wetted area of the steam boiler. In 1907 a major problem associated with roads was the level of dust raised by passing motor vehicles and there was support for a tax of £1 or 10s. per horse-power to pay for improvements to roads to solve this problem. At

666-558: Is a large surplus which is loaned to the Consolidated Fund .) The health care system is also often supported by taxes on tobacco, as smoking is considered a serious threat. For example, in Egypt, the revenue earned from these taxes is used to help to cover health insurance and provide prevention and rehabilitation for students. Besides the United Kingdom and Egypt, hypothecation helps to finance health care in many countries including Finland,

740-400: Is achieved when marginal utility of expenditure = marginal disutility of taxation. He explains this principle with reference to It was introduced by Swedish Economist " Erik Lindahl in 1919". According to his theory, determination of public expenditure and taxation will happen on the basis of public preferences which they will reveal themselves. Cost of supplying a good will be taken up by

814-412: Is an increase in government spending or a decrease in taxation, while contractionary fiscal policy is a decrease in government spending or an increase in taxes. Expansionary fiscal policy can be used by governments to stimulate the economy during a recession . For example, an increase in government spending directly increases demand for goods and services, which can help increase output and employment. On

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888-480: Is at point B, where the interest rate has increased to R2 and the quantity of capital available to the private sector has decreased to K2. The government has essentially made borrowing more expensive and has taken away savings from the market, which "crowds out" some private investment. The crowding out of private investment could limit the economic growth from the initial increase in government spending. A closer understanding of government fiscal operations contradicts

962-560: Is considered government investment because it will usually save money in the long run, and thereby reduce the net present value of government liabilities. Spending on physical infrastructure in the U.S. returns an average of about $ 1.92 for each $ 1.00 spent on nonresidential construction because it is almost always less expensive to maintain than repair or replace once it has become unusable. Likewise, government spending on social infrastructure , such as preventative health care , can save several hundreds of billions of dollars per year in

1036-609: Is mostly located in Asia such as China, India and Indonesia followed by the Middle East and Latin America. In these countries, the real health spending per capita grew by 2.2 times and increased by 0.6 percentage point as per a share of GDP from 2000 to 2017. Government acquisition intended to create future benefits, such as infrastructure investment or research spending, is called gross fixed capital formation, or government investment, which usually

1110-535: Is no "loanable funds" pool of currency in reality. Crowding out only refers to the shift of real resources from private to public use, not the crowding out of nominal private investment. Government deficit spending increases the net financial assets available to the non-government sector. Public expenditure can be divided into COFOG (classification of the functions of government) categories. Those categories are: Government spending on goods and services for current use to directly satisfy individual or collective needs of

1184-442: Is now dropped to 10%. Moreover, significant spending increments were in upper-middle-income economies, where population share has more than  doubled over the period, and share of global health spending nearly also doubled due to China and India's vast population joining that group. Unfortunately, all other spending share income groups had declined. From the continent view, North America, Western Europe, and Oceanic countries have

1258-531: Is the acquisition of these real resources for the public purpose and a non-inflationary bias in government policy-making that places the constraint on currency-issuing government spending, rather than nominal financing from prior revenue collection. The details of taxation are guided by two principles: who will benefit, and who can pay. Public expenditure means the expenditure on the developmental and non-developmental activity such as construction of roadways and dams, and other activity. Rules or principles that govern

1332-550: Is the largest part of the government. Acquisition of goods and services is made through production by the government (using the government's labour force, fixed assets and purchased goods and services for intermediate consumption ) or through purchases of goods and services from market producers. In economic theory or in macroeconomics , investment is the amount purchased of goods which are not consumed but are to be used for future production (i.e. capital ). Examples include railroad or factory construction. Infrastructure spending

1406-443: Is when a government takes actions to change government spending or taxes in direct response to changes in the economy. For instance, a government may decide to increase government spending as a result of a recession. With discretionary stabilization, most governments must pass a new law to make changes in government spending. John Maynard Keynes was one of the first economists to advocate for government deficit spending as part of

1480-400: Is when existing policies automatically change government spending or taxes in response to economic changes, without the additional passage of laws. A primary example of an automatic stabilizer is unemployment insurance or an employment guarantee, which provide financial assistance to unemployed workers or direct wages to recently unemployed workers, respectively. Discretionary stabilization

1554-656: The SDGs (in line with "public funds for public goods")". Similarly in regard to openness, a campaign by the Free Software Foundation Europe (FSFE) has called for a principle of "Public Money, Public Code" – that software created using taxpayers' money is developed as free and open source software , and Plan S calls for a requirement for scientific publications that result from research funded by public grants being published as open access . Public sector ethics may also concern government spending, affecting

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1628-513: The United Kingdom , the funds raised are dedicated to the BBC , but this type of hypothecation is also applied in many European countries. Government spending Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting , the acquisition by governments of goods and services for current use, to directly satisfy

1702-700: The 19th century, public expenditure was limited due to laissez faire philosophies. In the 20th century, John Maynard Keynes argued that the role of public expenditure was pivotal in determining levels of income and distribution in the economy. Public expenditure plays an important role in the economy as it establishes fiscal policy and provides public goods and services for households and firms. Several theories of taxation exist in public economics . Governments can be separated into two distinct types when it comes to their fiscal and monetary sovereignty: currency-issuers and currency-users. Currency-users at all levels (national, regional and local) need to raise revenue from

1776-621: The European Union in 2018. Countries with the highest percentage of public expenditure were France and Finland with 56 and 53 percent, respectively. The lowest percentage had Ireland with only 25 percent of its GDP. Among the countries of the European Union, the most important function in public expenditure is social protection. Almost 20 percent of GDP of European Union went to social protection in 2018. The highest ratio had Finland and France, both around 24 percent of their GDPs. The country with least social protection expenditure as percent of its GDP

1850-511: The Exchequer Churchill sought, successfully, to redirect a third of payments as taxation on luxury and pleasure uses with the stated aim of putting competition between road and rail on a fair basis. At the same time, the majority of road building and maintenance costs were met from general and local taxation. In 1932 Lieut. Colonel Moore-Brabazon said in a debate in the House of Commons about

1924-805: The GDP. There is research into government spending such as their efficacies or effective design or comparisons to other options as well as research containing conclusions of public spending-related recommendations. Examples of such are studies outlining benefits of participation in bioeconomy innovation or identifying potential "misallocations" or "misalignments". Often, such spending may be broad – indirect in terms of national interests – such as with human resources/education-related spending or establishments of novel reward systems . In some cases, various goals and expenditures are made public to various degrees, referred to "budget transparency" or "government spending transparency" . A study suggests "Greater attention to

1998-468: The Republic of Korea, Portugal, Thailand and Belgium. (Hypothecation of tax revenue for health Ole Doetinchem, World Health Report (2010) Background Paper, 51) An example from a different sector is television licences . People who use television sets to receive broadcast transmissions can be obliged to pay an annual fee (depending on local laws) and the revenues can be used to fund public broadcasting . In

2072-590: The Road Fund: This vote is different from any other because the money that goes to the Ministry of Transport is motorists' money. It is not Imperial taxation. It is money that comes from the motorists, to be spent on one definite thing, namely, the roads. If the Government come to the conclusion that they are going to spend less money on the roads, they have to make a case to the motorists why they are not going to reduce

2146-521: The SNA's measure of spending by roughly 4 percent of GDP compared with the standard measure tallied by the BEA. Public social spending comprises cash benefits, direct in-kind provision of goods and services, and tax breaks with social purposes provided by general government (that is central, state, and local governments, including social security funds). Public expenditures represented 46.7 percent of total GDP of

2220-834: The U.S., because for example cancer patients are more likely to be diagnosed at Stage I where curative treatment is typically a few outpatient visits, instead of at Stage III or later in an emergency room where treatment can involve years of hospitalization and is often terminal. Governments fund various research beyond healthcare and medical research (see above ) and defense research (see above ) . Sometimes, relevant funding decision-making makes use of coordinative and prioritizing tools, data or methods , such as evaluated relevances to global issues or international goals (see also 2020#Global goals and issues ) or national goals or major causes of human diseases and early deaths (health impacts). Although expenditure on ministerial, elected member and staff travel makes up only

2294-540: The United Nations' System of National Accounts (SNA), which measures the government sector differently than the U.S. Bureau of Economic Analysis (BEA). The SNA counts as government spending the gross cost of public services such as state universities and public hospitals. For example, the SNA counts the entire cost of running the public-university system, not just what legislators appropriate to supplement students' tuition payments. Those adjustments push up

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2368-492: The World Health Organisation (WHO), the increase in health spending in low-income countries, and it rose by 7.8% a year between 2000 and 2017, while their economies grew by 6.4%, it is explained in the figure. However, the middle-income economies health spending grew more than 6%, and average annual growth in high-income countries was 3.5%, which is about twice as fast as economic growth. In contrast, health spending by

2442-420: The above loanable funds theory. In fact, in the first instance and all else equal, increased government deficit spending increases liquidity in the banking system, thereby pushing down on interest rates. Government borrowing is the act of swapping the excess bank reserves created via the increased deficit spending with Treasury securities, thus draining this excess liquidity back down to pre-spending levels. There

2516-645: The aggregate preference can be easily revealed. One of the most known cases of hypothecation in Europe is the National Insurance contribution in the United Kingdom . Money that is raised goes directly to the National Insurance Fund from which the benefits are paid. This is also an example of the combination of wide and weak earmarking. (In practice, National Insurance today funds general government expenditures, for after accounting for health spending there

2590-531: The amount of average public expenditure share was between 22 and 23 percent, twice as much as before World War I. However, it is fair to mention that part of this increase of public expenditure share was caused by GDP fall. Most of industrialized countries had its GDP over 15 percent before the World War II. Only Australia, Norway and Spain had less than 15 percent of GDP. From the start of the World War I until 1960

2664-475: The amount of the revenue raised. With earmarking, inappropriate funding levels may occur as the strong hypothecated tax implies the dependence of spending on the tax revenues and thus on the macroeconomic performance of the country. Secondly, the flexibility of fiscal policy and thus the ability to influence the economic situation is reduced when hypothecation is used. In 2012, the Mercatus Center pointed out

2738-413: The arguments for and against hypothecated tax are based on it. Secondly, differentiation is made between wide and narrow hypothecation. When the tax revenues finance the entire public service such as the health care , it is described as wide hypothecation. Narrow hypothecation means that only a specific area such as nursery education is funded. The third level of splitting is based on the type of, and

2812-444: The average cost of public funds is estimated to be $ 1.20 and $ 1.30 for each dollar raised (Robson, 2005). The marginal cost is probably higher, but estimates differ widely depending on the tax that is increased". In the US the total investment in medical and health research and development (R&D) in the US had grown by 27% over the five years from 2013 to 2017, and it is led by industry and

2886-500: The average share of public expenditure in GDP increased slowly from 22 to 28 percent. Most of this increase was given by growth of military spending caused by World War II. Spain, Switzerland and Japan had their public expenditure still below 20 percent of their GDPs. The average public expenditure, as a share of GDP, increased rapidly between years 1960 and 1980 from around 28 to 43 percent. No industrial country had this share below 30 percent in 1980. In Belgium, Sweden and Netherlands it

2960-525: The avoidance of wasteful expenditure, identifying "practical steps" and setting specific targets for reduction of expenditure on travel, conference attendance and expense, real property and fleet management . At the end of the 19th century average public expenditure was around 10 percent of GDP. In US it was only 7 percent and in countries like United Kingdom, Germany or Netherlands it did not exceed amount of 10 percent. Australia, Italy, Switzerland and France had public expenditure over 12 percent of GDP. It

3034-552: The basis that no other claims would be made on the Exchequer for construction of new roads. The Road Fund was never fully utilised, returning a surplus each year, and it became notorious for being used for other government purposes. Winston Churchill opposed the Road Fund, saying: It will be only a step from this for them to claim in a few years the moral ownership of the roads their contributions have created. In 1926 as Chancellor of

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3108-448: The countries with highest military spending as percentage of GDP in 2023 among top 20 military spenders are Ukraine, Algeria, Saudi Arabia and Russia. Top 20 countries with the highest military spending 2023, where the values for China, Russia and Saudi Arabia are estimated: Some sources say that Russian and Chinese military spending are actually far higher. Research Australia found 91% of Australians think 'improving hospitals and

3182-1136: The development of methods and evidence to better inform the allocation of public sector spending between departments" may be needed and that decisions about public spending may miss opportunities to improve social welfare from existing budgets. A study investigated funding allocations for public investment in energy research, development and demonstration reported insights about past impacts of its drivers, that may be relevant to adjusting (or facilitating) "investment in clean energy " ( see below ) "to come close to achieving meaningful global decarbonization ". The investigated drivers can be broadly described as crisis responses, cooperations and competitions. Studies and organizations have called for systematically applying principles to spending decisions or to take current issues and goals such as climate change mitigation into account in all such decisions. For example, scientists have suggested in Nature that governments should withstand various pressures and influences and "only support agriculture and food systems that deliver on

3256-452: The expenditure policy of the government are called "canons of public expenditure". Economist George Findlay Shirras laid down the following four canons of public expenditure, although some are understood not to be required: Three other canons are: The criteria and pre-conditions for arriving at this solution are collectively referred to as the principle of maximum social advantage. Taxation (government revenue) and government expenditure are

3330-893: The federal government. However, the industry accounted for 67% of total spending in 2017, followed by the federal government at 22%. According to the National Institute of Health (NIH) accounted for the lion's share of federal spending in medical and health research in 2017 was $ 32.4 billion or 82.1%. Also, academic and research institutions, this includes colleges, and universities, independent research (IRIs), and independent hospital medical research centres also increased spending, dedicating more than $ 14.2 billion of their own funds (endowment, donations etc.) to medical and health R&D in 2017. Although other funding sources – foundations, state and local government, voluntary health associations and professional societies – accounted for 3.7% of total medical and health R&D expenditure. On

3404-401: The fiscal policy response to an economic contraction . According to Keynesian economics , increased government spending raises aggregate demand and increases consumption , which leads to increased production and faster recovery from recessions. Classical economists , on the other hand, believe that increased government spending exacerbates an economic contraction by shifting resources from

3478-610: The government of goods and services produced by market producers that are supplied to households—without any transformation—as "social transfers" in kind. Government spending or government expenditure can be divided into three primary groups, government consumption, transfer payments, and interest payments. Stated reasons for defense spending include deterrence and active military operations. Factors of recent defense spending increases include Russian invasion of Ukraine and related deteriorating security situation. The countries with highest total military spending are USA and China, and

3552-548: The health system' should be the Australian Government's first spending priority. Crowding 'in' also happens in university life science research Subsidies, funding and government business or projects like this are often justified on the basis of their positive return on investment. Life science crowding in contrasts with crowding out in public funding of research more widely: "10% increase in government R&D funding reduced private R&D expenditure by 3%...In Australia,

3626-416: The high-income countries continues to represent to be the largest share of global spending, which is about 81%, despite it covers only 16% of world's population; although it down from 87% in 2000. The primary drivers of this change in global spending on healthcare are India and China, which they moved to higher-income groups. Furthermore, just over 40% of the world population lived in low-income countries, which

3700-420: The highest levels of spending, and West Central Asia, and East Africa the lowest, which is closely followed by South Asia, it is explained in the figure. It is also true that fast economic growth is associated with increased health spending and sustained rapid economic growth between 2000 and 2017. Even more, fast economic growth which is generally associated with the higher government revenues and health spending

3774-443: The individual or collective needs of the community, is classed as government final consumption expenditure . Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is classed as government investment (government gross capital formation ). These two types of government spending, on final consumption and on gross capital formation, together constitute one of

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3848-600: The major components of gross domestic product. Spending by a government that issues its own currency is nominally self-financing. However, under a full employment assumption, to acquire resources produced by its population without potential inflationary pressures, removal of purchasing power must occur via government borrowing , taxes , custom duties , the sale or lease of natural resources, and various fees like national park entry fees or licensing fees. When these sovereign governments choose to temporarily remove spent money by issuing securities in its place, they pay interest on

3922-482: The members of the community is called government final consumption expenditure (GFCE) It is a purchase from the national accounts "use of income account" for goods and services directly satisfying of individual needs ( individual consumption ) or collective needs of members of the community ( collective consumption ). GFCE consists of the value of the goods and services produced by the government itself other than own-account capital formation and sales and of purchases by

3996-413: The money borrowed . Changes in government spending are a major component of fiscal policy used to stabilize the macroeconomic business cycle . Public expenditure is spending made by the government of a country on collective or individual needs and wants of public goods and public services , such as pension, healthcare, security, education subsidies , emergency services, infrastructure, etc. Until

4070-432: The negative effects that dedicating tax revenues to specific expenditures can have on the policymakers. In their report they stated that hypothecation can be used to mask the increases in total government spending. The problem of ambiguity of hypothecation occurs in many countries all over the world. As mentioned before, revenues of hypothecated taxes are often used to finance health care or education because in these sectors

4144-412: The other hand, contractionary fiscal policy can be used by governments to cool down the economy during an economic boom. A decrease in government spending or an increase in taxes can help reduce inflationary pressures within the economy. During economic downturns, in the short run, government spending can be changed either via automatic stabilization or discretionary stabilization. Automatic stabilization

4218-443: The other hand, global health spending continues to increase and rise rapidly – to US$ 7.8 trillion in 2017 or about 10% of GDP and $ 1.80 per capita – up from US£7.6 trillion in 2016. In addition, about 605 of this spending was public and 40% private, with donor funding representing less than 0.2% of the total although the health spending in real terms has risen by 3.79% in a year while global GDP had grown by 3.0%. According to

4292-421: The people. The tax that they will pay will be revealed by them according to their capacities. Government spending can be a useful economic policy tool for governments. Fiscal policy can be defined as the use of government spending and/or taxation as a mechanism to influence an economy. There are two types of fiscal policy: expansionary fiscal policy, and contractionary fiscal policy. Expansionary fiscal policy

4366-534: The private sector, which they consider productive, to the public sector, which they consider unproductive. In economics, the potential "shifting" in resources from the private sector to the public sector as a result of an increase in government deficit spending is called crowding out . The figure to the right depicts an outdated theory for the market for capital, otherwise known as the market for loanable funds . The downward sloping demand curve D1 represents demand for private capital by firms and investors, and

4440-506: The railways. It had concluded that the method of road funding, which had relied on parishes and local authorities to fund a portion of the road network through their own means, represented a subsidy to the road hauliers. After the 1936 Act the proceeds of road vehicle duties were to be paid directly into the Exchequer. The Road Fund itself was finally wound up in the Miscellaneous Financial Provisions Act 1955, becoming

4514-466: The real cost of services to people; and supporting democracy . These can be broken down into four main hypothecation-supporting points. The arguments against earmarking come mostly from the traditional way of viewing the taxes where they were confined to compulsory, unrequited payments to the general government as defined by the OECD in 1988. Firstly, public spending should be determined by policies and not by

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4588-453: The reason for imposing, the tax that is hypothecated. The most supported type is a combination of strong and narrow hypothecation. In this case, the hypothecation can serve as a beneficial link between demand and supply. An example can be financing the roads in the U.S. by the gasoline tax . There are three main ideas of which benefits hypothecation can bring: believing that people will be willing to pay more for better services; demonstrating

4662-490: The revenues from taxes on the tobacco industry to help the fight against smoking-related diseases since 1999. The hypothecated tax can be divided into three groups based on the main characteristics. The emphasis can be put on the final use of the revenues, on the vastness of the area financed from the money earned or on the type of the tax. Each group then has two subsections. In the first case, we distinguish between strong and weak hypothecation. Strong hypothecation means that

4736-405: The revenues from the tax go only to financing the particular service and the service is financed only through the revenues from this tax. Strong hypothecation is thought to be appropriate for pure public goods where voters must reveal their consumption preferences. If at least one of the two conditions is not met, we say that the hypothecation is weak. This distinction is the most common as many of

4810-474: The road fund can be traced back to a number of "assigned revenues" granted to local authorities in 1888 as part of a financial settlement to limit recurrent demands for grants from central government. In the budget of 1909, the then Chancellor of the Exchequer , David Lloyd George combined these grants into a single tax on petrol and a duty on the rated horsepower of motor cars. Under the same act it became compulsory for motor vehicles subject to VED to display

4884-463: The shares and intentions of government spending or their respective rationales (beyond ethical principles or implications of the contextual socioeconomic structures), as well as corruption or diversion of public funds. In 2012, following a United States presidential Campaign to Cut Waste, the Office of Management and Budget issued a memorandum to the heads of federal departments and agencies calling for

4958-518: The taxation upon their cars. If they are going to keep on the same taxation and to spend the money derived from the motorists upon Imperial taxation, let them say so. Hypothecation of VED into the Road Fund was formally ended under the Finance Act 1936, in accordance with the recommendations of the Salter Report that controversially sought to introduce a balance between the road haulage industry and

5032-626: The time Lloyd George announced that the roads system would be self-financing so from 1910 the proceeds of road vehicle excise duties , which had been in existence in various forms since 1889, were dedicated to fund the building and maintenance of the road system under a scheme known as the Road Board . Under the Roads Act 1920 the Road Board was replaced by the Road Fund , dedicated solely to road building on

5106-414: The two tools. Neither of excess is good for the society, it has to be balanced to achieve maximum social benefit. Dalton called this principle as "Maximum Social Advantage" and Pigou termed it as "Maximum Aggregate Welfare". Dalton's principle of maximum social advantage – maximum satisfaction should be yield by striking a balance between public revenue and expenditure by the government. Economic welfare

5180-413: The upward sloping supply curve S1 represents savings by private individuals. The initial equilibrium in this market is represented by point A, where the equilibrium quantity of capital is K1 and the equilibrium interest rate is R1. In this theory, if the government increases deficit spending , it will borrow money from the private capital market and reduce the supply of savings to S2. The new equilibrium

5254-472: Was $ 16,110 per person. Norway and Sweden expended the most at $ 40,908 and $ 26,760 per capita respectively. The federal government of the United States spent $ 11,041 per person. Other large economy country spending figures include South Korea ($ 4,557), Brazil ($ 2,813), Russia ($ 2,458), China ($ 1,010), and India ($ 226). The figures below of 42% of GDP spending and a GDP per capita of $ 54,629 for the U.S. indicate

5328-499: Was Ireland with 9 percent. The second largest function in public expenditure is expenditure on health. The general government expenditure on health in European Union was over 7 percent of GDP in 2018. The country with highest share of health expenditure in 2018 Denmark with 8.4 percent. The least percentage had Cyprus with 2.7 percent. General public services had 6 percent of total GDP of European Union in 2018, Education around 4.6 percent and all other categories had less than 4.5 percent of

5402-484: Was considered as a significant involvement of government in economy. This average share of public expenditure increased to almost 12 percent before the start of World War I. Due to the World War I anticipation, the share increased quickly in Austria, France, United Kingdom or Germany. The World War I caused a global growth of the public expenditure share in GDP. In United Kingdom, Germany, Italy and France, which were affected

5476-522: Was even over 50 percent. In last two decades of 20th century share of public expenditure kept increasing, but the growth significantly slowed down. In 1996 the average public expenditure was around 45 percent, which is in comparison with 1960–1980 period slow increase from year 1980. During 1980–1996 period the public expenditure share even declined in many countries, for example United Kingdom, Belgium, Netherlands etc. There are several factors that have led to an enormous increase in public expenditure through

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