Focus on Spanish Society. March 2022
Fecha: marzo 2022
Gasto público, Gasto en defensa, Gasto sanitario, Protección social, Opinión pública
Section I. Spain in Europe
I.1. Convergence in public expenditure in terms of GDP
Eurostat has recently published public expenditure data for the year 2020. The data reflect the impact of the first ten months of the pandemic and show the effort made by European states to combat the health crisis and mitigate its most severe economic and social effects.
The first piece of evidence that stands out is the significant increase in Europe’s public spending in 2020. While the average public spending in the EU-27 amounted to 46.5% of GDP in 2019, it rose to 53.1% in 2020. This 6.6 percentage point increase clearly highlights the strong growth in the volume of the public sector in European economies.
In Spain, increase in public expenditure in 2020 has been even more significant. Between 2019 and 2020, it soared by 10 percentage points, from 42.1% to 52.4% (reaching approximately 588 billion euros). Thus, Spain’s public expenditure, traditionally below the EU average, has converged with it (Figure I.1).
The 2020 increase in public expenditure as a percentage of GDP is the result of the growth in spending in absolute terms resulting from the economic and social policies adopted by European governments in response to the pandemic, but also of the decrease in GDP. In other words, while the numerator of the ratio (public expenditure) has increased, the denominator (GDP) has shrunk.
Since Spain experienced the biggest fall in GDP in the EU-27 in 2020 (-10.8%), the 2020 convergence between Spanish and European public spending is not in itself good news. In a way, the price of convergence has been a steep decline in GDP. Furthermore, it has to be taken into consideration that Spain ended 2020 with the highest public deficit within the European Union (11%).
1.1. Significant increases in health and social protection expenditure
The most significant spending growth between 2019 and 2020 was in the areas of health and social protection. Public expenditure on both functions accounted for 30% of GDP in the EU-27 as a whole as well as in Spain (Figure I.2).
The EU-27 average public spending on health increased in 2020 by one percentage point, from 7% to 8% of GDP. As regards spending on social protection, it rose strongly in the EU during the Great Recession (2009-2013) and maintained a high level since then, around 19-20% of GDP. However, the pandemic boosted the EU-27´s average public spending on social protection to 22% of GDP (Figure I.3).
Spain’s public expenditure on social protection also reached 22% in 2020, 2.7 pp more than in 2019 (from 217 to 248 billion euros). Health expenditure increased by 1.5 pp, from 6.1 to 7.6 (from 76 to 85 billion euros).
1.2. Stable expenditure on defense
Defense spending is, together with housing, one of the expenditure headings to which the EU Member States devote fewer public resources (Figure I.2). Average EU-27 government expenditure on defense amounts to 1.3% of GDP. However, differences across EU Member States are visible, with Greece, the Baltic Republics and Romania spending more than 2% of their GDP on this area in 2020 (Figure I.4). These are countries which, for different reasons, feel external security threats. By contrast, Spain, Belgium, Austria, Portugal, Ireland, Malta and Luxembourg spend less than 1% of their GDP on this expenditure category.
Average public expenditure on defense increased slightly in the EU-27 in 2020 (from 1.2% to 1.3% of GDP). The increase in Spain was also modest (from 0.8% to 0.9% of GDP). In absolute terms, Spanish public spending on defense approached 10.6 billion in 2020, approximately the monthly cost of Social Security contributory benefits.
I.2. Strong natural population decrease
According to provisional population data released by Eurostat, the number of deaths in the EU-27 exceeded the number of births in 2020 by nearly 1,140,000. Although the EU has faced since 2013 natural population decreases, the drop in 2020 has been by far the largest (2.4 times bigger than the drop recorded in 2019) (Figure I.5). In Spain, the pandemic has also strengthened the natural population decrease documented since 2017, with a drop in 2020 2.7 times larger than that confirmed in 2019.
Since immigration to the European Union also dropped drastically in 2020 due to the pandemic, in contrast to previous years, it did not manage to counter the natural population decrease. Thus, at the beginning of 2021, the population of the EU-27 showed a decrease (Figure I.6).
Many European countries began 2021 with less population than a year before (among them, Germany, Italy, Poland, Hungary, Romania and Greece), but not Spain, whose net migration (approximately 215,000 people) countered its natural population decrease (approximately 153,000) (Figures I.6 and I.7).
Spain’s population on January 1st, 2021, amounted to 47,394,00 inhabitants and represented 11% or the EU-27 population. Being the fourth country which contributes more population to the EU-27, after Germany (19%), France (15%) and Italy (13%), it also holds this position in the ranking of Member States in terms of contributions to EU GDP (8%).
However, Spain belongs to the group of countries whose contributions to the EU in terms of GDP are lower than those in terms of population. In contrast, Germany, France, the Benelux, the Nordic countries, Austria and Ireland stand out for showing higher contribution rates to EU GDP than to EU population (Figure I.8).
Section II. Public opinion trends
Weak public support of government expenditure on defense
Spain’s comparatively low government expenditure on defense must be put into the context of an unfavorable public opinion as regards military spending. The majority of Spanish citizens thinks that resources devoted to this expenditure heading are adequate (36%) or outsized (30%), according to the yearly survey on fiscal policy conducted by the Center for Sociological Research (CIS) in 2021. Compared with other government functions, social preferences for defense spending are very low. While the percentage of people who believe too few resources are devoted to health, pensions, long-term care, scientific research or environmental protection oscillates between 60% and 80%, those considering that defense is underfunded only amounts to about a fifth (21%).
Certainly, if we look at the survey responses to this same question since the mid-1980s, a trend towards decreasing opposition to devoting public resources to defense becomes evident (Figure II.2). But this trend has gone hand in hand with a slow downward trend in government spending on defense.1 However, since 2019, there are signs that public opinion is slowly changing towards a less hostile attitude on increasing expenditure on defense. It seems likely that the Russian invasion of the Ukraine reinforces this trend.
1 According to the database of the Stockholm Institute of Peace Research (SIPRI), which offers data for Spain since 1955, public spending on defense reached its maximum as a percentage of GDP in the mid-1980s (3%), stabilizing below 1.5% as of 2003 (https://www.sipri.org/databases/milex).