20180615-NATIXIS-Euro_zone__Where_has_there_been_state_disengagement__6页_631kb

Flash Economics Summary: State Disengagement in the Euro Zone

Core Content

This document explores the perception of state disengagement in the euro zone, focusing on whether public spending and services have declined over the last 20 years. It challenges the common belief that this decline is the main driver of the rise of populist political parties, suggesting that public opinion may be more influenced by changes in job quality and income distribution than by actual reductions in state support.

Key Findings

• Public Spending as a Whole:
  There has been a decline in the share of public spending relative to GDP in Germany, Austria, and Ireland over the past 20 years. However, this trend is not consistent across all euro-zone countries.

• Public Sector Employment:
  The share of public sector employment in total employment has decreased in most euro-zone countries, except for Belgium, Portugal, and Greece.

• Social Welfare Spending:
  Public spending on healthcare, pensions, family, and housing has not declined in any euro-zone country. This suggests that the state has not disengaged from social welfare provision.

• Human Capital Spending:
  Public spending on education, research, and the labour market has decreased in Portugal, Italy, and Ireland, indicating a reduction in investment in human capital in these countries.

Main Viewpoints

• The perception of state disengagement is not universally accurate across the euro zone.
• While public spending and employment in the public sector have declined in some countries, social welfare spending has remained stable.
• The decline in public spending on human capital is more pronounced in certain countries, suggesting a shift in state priorities.
• The main concern of public opinion may be related to the quality of jobs and income inequality, rather than a general reduction in state services.

Conclusion

Based on the analysis, the document concludes that state disengagement can be observed in Germany, Italy, Austria, and Ireland. These countries have experienced reductions in both public spending and public sector employment, which may contribute to the public's perception of disengagement. However, in other countries, such as France, Spain, Belgium, and the Netherlands, the state has not disengaged in the same manner, and public welfare spending remains stable.

Key Countries Affected

Key Takeaway

The state has not uniformly disengaged in the euro zone. While some countries have seen a reduction in public spending and employment, social welfare spending remains stable. The perception of disengagement may be more closely linked to changes in job quality and income distribution than to an actual reduction in state support.