Government Spending and the State of Government Finance in the 25 Member Countries of the European Union

The issue of government finance is a subject that has received much attention recently and its stability within the EU Member States is at the heart of debates on growth and the viability of the “European Social Model.” Too often an overly simplistic equation assimilates State interventionism in the economy, the excessive burden of government spending in the GDP and the accumulation of deficits which increases government debt that might snowball and encroach gradually year by year on governments’ room for manœuvre.

However research into the situation in EU25 reveals a much more complex picture. Of course the burden of government spending is on average rather high within the EU in comparison with the rest of the OECD and the most recent enlargement has hardly improved matters. But there is no correlation between the burden of spending and the control of government funding: several States provide the example of high but sustainable government spending. The good news maybe is that there is no single recipe for success but approaches that might be combined.