Public expenditure as a share of GNP in Europe 1950-1980, by country

Between 1950 and 1980, Sweden's public expenditures increased from 23 percent of its total gross national product* to 62 percent of GNP. Historically in Europe, a large share of public expenditure was directed towards the military, and welfare programs did exist but were given much less of a priority. Following the Second World War, however, the concept of the welfare state emerged in Western Europe (with the Nordic model becoming the most revered in the following decades), and governments began investing more in education, healthcare, infrastructure, and social securities. Not only were public funds redirected towards welfare programs in this period, but taxation was also increased to maintain this investment. Perhaps surprisingly, there was relatively little public opposition to higher taxes, which has been attributed to the rate of improvements in quality of life and the rise in disposable income in these decades.

Before the First World War, average national figures were generally between 10 and 12 percent of GNP, and this increased to somewhere between 20 and 30 percent in the 1930s. In the given countries, these figures were similar in 1950, but, as mentioned previously, much of this was due to military spending in the past, whereas the focus had shifted to welfare and reconstruction during the postwar recovery period. All countries shown were investing between 30 and 40 percent of GNP into public expenditure by 1965, but this jumped to more than 60 percent in Sweden and the Netherlands, and over 50 percent in Denmark and Belgium. Countless studies have shown links between public spending and long-term economic stability, and the Northern European countries are shown here rank among the highest when it comes to living standards, education, and happiness.