Taxes are the lifeblood of European public finances, funding everything from classrooms to hospitals to pension systems. In 2024, tax revenues across the European Union reached 40.3% of GDP, while total government expenditure stood at 49.6%, according to Eurostat. But where exactly does that money go? The answer reveals a great deal about national priorities and the different social models that coexist within the continent.
Social protection dominates
Across the EU, social protection is by far the largest spending category, absorbing 19.6% of GDP and roughly 40% of all government outlays. That means two out of every five euros spent by public authorities go toward shielding citizens from the financial risks of unemployment, sickness, disability, old age, parenthood, housing insecurity and social exclusion. Pensions alone account for nearly half of all social protection benefits.
The share varies significantly from country to country. In Finland, social protection represents 45.9% of government spending, the highest among 31 European countries surveyed, which include the EU member states plus the UK, Norway, Switzerland and Iceland. At the other end of the scale, Hungary allocates just 26% to this category. The EU's four largest economies—Germany, France, Italy and Spain—all devote more than 40% of their budgets to social protection, while the UK sits at 34.5%, according to OECD data.
This diversity is not necessarily a sign of inefficiency. A European Central Bank report by Marta Rodríguez-Vives and Linda Kezbere notes that there is no "one-size-fits-all optimal level of social spending" and that pension systems vary considerably across euro area countries.
Health: second place, but not everywhere
On average, health is the EU's second-largest spending category, with a 15% share. But in nine countries—including Italy, Hungary, Romania, Bulgaria, Greece, Malta, Luxembourg, Latvia and Switzerland—another category takes the runner-up spot. The range is striking: Switzerland spends just 6.7% of its government budget on health, while Ireland allocates 24.3%.
The UK stands out for its comparatively high health spending, at 19% of government outlays, ahead of France (15.6%) and Germany (15.4%). The ECB report points out that differences in healthcare financing models—how costs are split between governments and households—help explain these variations.
More than half goes to social protection and health combined
Together, social protection and health account for 55% of EU government spending. In two-thirds of the countries surveyed, the combined share exceeds 50%. All five Nordic countries and the EU's Big Four are above the EU average, while Hungary (36%) and Malta (39.5%) fall well below. Ireland and Finland top the list at over 59%.
General public services, economic affairs and education
Three other categories each take roughly 10% of EU budgets: general public services (12.4%), economic affairs (10.8%) and education (9.7%). But national differences are pronounced.
General public services—covering government administration, parliaments, public finances, foreign affairs, public debt and intergovernmental transfers—range from 7.5% in Bulgaria to 21.2% in Hungary. In Hungary, Greece and Italy, this category is the second-largest after social protection.
Economic affairs, which includes spending on jobs, business, agriculture, energy, industry, transport and communications, is the second-largest category in Malta, Latvia, Romania, Bulgaria and Luxembourg. Its share varies from 6.5% in Denmark to 20.3% in Malta.
Education is the second-largest spending area only in Switzerland, where it takes 16.3% of the budget. Notably, all four of the EU's largest economies spend below the EU average on education, with Italy at just 8%.
Defence and other categories
Defence is the EU's sixth-largest spending category, at 3.5% of government outlays. The UK allocates a comparatively higher share—4.9%—than France (3.2%) or Germany (2.7%). Other categories, such as recreation, culture, religion, environmental protection and housing, make up the remainder.
These five main categories—social protection, health, general public services, economic affairs and education—together account for between 80% and 92% of government spending across the countries surveyed, with the EU average at 87.9%.
Understanding these allocations is essential for any debate about fiscal policy, tax reform or the future of the welfare state. As the ECB report suggests, there is no single blueprint for how European governments should spend public money—but the choices they make shape the lives of citizens across the continent.
