Total general government expenditure 

Updated: 31.1.2017 - Next update: 31.1.2018
   
 
 
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Nearly one-half of general government expenditure was directed to social protection in 2015

The biggest share of general government expenditure was directed to social protection in 2015. The next biggest expenditure items were general public services, health care and education. The statistical data for 2015 are not fully comparable with previous years due to a revision in the statistics on local government finances.

Statistical release

Source:
Statistics Finland / General government expenditure by function


Description of indicator

The indicator describes general government expenditure by function on the basis of national accounts data.

The term "general government" denotes the public sector and includes central government, (federal) constituent states, local government, and social security funds. The Finnish general government sector includes the State, municipalities and intermunicipal authorities, the regional government of the Åland Islands, and social security funds.

The measurement of general government expenditure is part of the evaluation of general government finances and the structural coordination of economic and social policy. A key objective of Finland’s economic policy is to maintain sustainable economic growth that at the same supports the stability of the public sector. A prerequisite for stability is a balance between expenditure and revenue. The parallel development of economic and social policy has long been a notable feature of the Nordic welfare society. This is in part a necessity, given that large public sector expenditure cannot be covered without an economic policy that supports employment and the labour sector. A key objective of social policy, moreover, is precisely the support of job-creating economic growth. An economic policy that creates jobs effectively and increases tax revenue significantly reduces pressure on growth of general government expenditure.

The economy and the social sector should be viewed as a multisectoral entity consisting of revenue and expenditure that is influenced by economic development and the public sector balance. Examining the development of general government expenditure enables an evaluation to be made of both economic stability and the sector-specific need for the allocation of income distributions. An examination of macroeconomic development is important, because its effects are reflected directly in the volume of general government expenditure. As the economy weakens, output contracts, whereupon tax revenues linked to output also decline. An economic downswing at the same time increases the public sector’s income distribution, and therefore the fiscal balance of general government finances also deteriorates. Alongside economic development, the biggest factors influencing growth of general government expenditure are the ageing of the working population and the simultaneous distortion of the dependency ratio as well as a decline of the tax revenue generated by work.

Although social expenditure represents the largest segment of general government expenditure, restrictions on the growth of general government expenditure and general government balancing measures should be directed at the broad spectrum of general government expenditure. In addition to social security, general government expenditure consists of education, health-care and environmental protection costs as well as the costs of defence and general public administration.