Government expenditure on education in the EU

By Mircea Badescu, Massimo Loi. Government expenditure on education in the EU: Level and trends.
Introduction
This paper analyses the 2010 level and the main trends related to the general government expenditure on education since 2002. 1 This analysis is based on data from Classification of the Functions of Government (COFOG) which is one of the four classifications of expenditure according to purpose used in the System of National Accounts (SNA). As opposed to the other international classification used to compare education finance data - the Unesco-OECD-Eurostat data collection (UOE) - COFOG has the advantage of providing more recent data. A detailed comparison between the two data sources is provides in the annex.
Main findings:
- In 2010, the amount directed to education was about 670 billion of Euros. It increased between 2002 and 2010 (see Chart 1 below and Table 1 in appendix).
- With the start of economic recession in 2008 EU governments have managed to secure growth of education expenditure (2.2% in 2008, 0.6% in 2009 and 3.5% in 2010). As a result of a sizeable drop in the GDP, this implied an increase in government expenditure on education as percentage of GDP.
- At the country level in 2010, government spending on education as a percentage of GDP was the highest in Denmark (8.1%), Cyprus (7.5%), Sweden and UK (7%). The lowest percentages are observed in Romania (3.4%) and Greece (3.8%).
- In the majority of EU countries, less than a quarter of government expenditure went to tertiary education in 2010. However, Romania, Finland and Poland allocated about 30% of their public government funds to tertiary institutions whereas this share was 8% in Luxembourg and 10% in Italy.
- The emphasis on specific categories of government expenditure at the EU level has changed between 2002 and 2010. The share of education expenditure has slightly decreased in 2010 compared to 2002, and now represents below 11% of the total government expenditure. This proportion goes from 7.6% in Greece to 16.7% in Estonia...
Conclusions
1. Relative to GDP, government expenditure on education indicates the priority a country gives to education. The proportion of a country’s financial resources devoted to education is the result of choices made by governments, enterprises, and individual students and their families. Taking into account all general government sources of funds, in 2010 EU countries as a whole spent about 5.5% of their collective GDP on education with over 4 percentage points difference between the country spending the most and the country spending the least. Government spending on education as a percentage of GDP was the highest in Denmark (8.1%), Cyprus (7.5%), Sweden and UK (7%) whereas the lowest percentages are observed in Romania (3.4%) and Greece (3.8%).
2. In 2010, all EU countries allocated more than two-thirds of their combined government expenditure to education below the tertiary level. Between 2002 and 2010, spending on the various levels of education evolved quite differently. In countries where the enrolments at the tertiary level went up considerably in the past years (ex. Poland, Romania), the proportion of government spending at this level has subsequently increased.
3. Education has to compete with a wide range of other government-funded areas for available public resources. In 2010, education took a decreasing share of total government expenditure in most EU countries compared to 2002. In Romania, Ireland, Portugal, Lithuania, there have been particularly significant shifts in the share of government expenditure away from education. These shifts are likely to reflect government priorities. Further analysis is needed to better capture the spending patterns and to isolate the determinants of these changes in each country. Download Government expenditure on education in the EU: Level and trends.