Government final consumption expenditure (GFCE) is a transaction of the national account's use of income account representing government expenditure on goods and services that are used for the direct satisfaction of individual needs (individual consumption) or collective needs of members of the community (collective consumption).

It consists of the value of the goods and services produced by the government itself other than own-account capital formation

Capital formation

Capital formation is a concept used in macroeconomics, national accounts and financial economics. Occasionally it is also used in corporate accounts. It can be defined in three ways:...

 and sales and of purchases by the government of goods and services produced by market producers that are supplied to households - without any transformation - as social transfers in kind (for more detail see for example )

Data

Data on government final consumption expenditure shed light on the involvement of governments in providing goods and services for the direct needs of the population. A high government share in the provision of individual consumption goods and services is often found in countries known as welfare state

Welfare state

A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those...

s. This may be illustrated by looking at data for the European Union (downloadable from Eurostat's database providing figures on http://nui.epp.eurostat.ec.europa.eu/nui/show.do?query=BOOKMARK_DS-071045_QID_-19AF8074_UID_-3F171EB0&layout=time,L,X,0;geo,L,Y,0;unit,L,Z,0;direct,L,Z,1;indic_na,L,Z,2;sector,L,Z,3;INDICATORS,L,Z,4;&zSelection=DS-071045direct,PAID;DS-071045unit,MIO_EUR;DS-071045indic_na,P3;DS-071045INDICATORS,FLAG;DS-071045sector,S13;&rankName1=direct_1_0_-1_2&rankName2=sector_1_0_-1_2&rankName3=unit_1_0_-1_2&rankName4=INDICATORS_1_0_-1_2&rankName5=indic-na_1_0_-1_2&rankName6=time_1_0_0_0&rankName7=geo_1_2_0_1&sortC=ASC_-1_FIRST&rStp=&cStp=&rDCh=&cDCh=&rDM=true&cDM=true&empty=false&wai=false&time_mode=NONE&lang=ENfinal consumption expenditure by general government and the total ecoconomy for years 2004-2008]):

• Approximately one quarter of the economy-wide final consumption expenditure in the European Union of 27 member states is made by governments; countries with relatively large government shares in final consumption expenditure are Denmark, Luxembourg, the Netherlands, Finland and Sweden (around one-third of their final consumption expenditure).
• 60% of the governments' final consumption expenditure in the European Union of 27 member states is individual consumption; the largest shares of individual consumption in government final consumption expenditure are observed for Sweden (more than 70%).
• These findings mirror the importance of social transfers in kind in European countries, where the share of household final consumption expenditure
  Household final consumption expenditure
  is a transaction of the national account's use of income account representing consumer spending. It consists of the expenditure incurred by households on individual consumption goods and services, including those sold at prices that are not economically significant...
  
   in actual final consumption of the households is often less than 80%.

See also

• Final consumption expenditure
  Final consumption expenditure
  In the national accounts expenditure on goods and services that are used for the direct satisfaction of individual needs or collective needs of members of the community is recorded in the use of income account under the transaction final consumption expenditure .The most important part of final...
  
  
• Household final consumption expenditure
  Household final consumption expenditure
  is a transaction of the national account's use of income account representing consumer spending. It consists of the expenditure incurred by households on individual consumption goods and services, including those sold at prices that are not economically significant...
  
  
• Government spending
  Government spending
  Government spending includes all government consumption, investment but excludes transfer payments made by a state. Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is classed as government final...
  
  

External links

• Government final consumption expenditure