Final Consumption Expenditure (FCE) of Households is money spent on food, electricity bills, phone bills, rent, bus fares, fridges, and so on to satisfy the household’s needs and wants.
Final Consumption Expenditure of Government is government spending on providing services and goods directly for the country. This includes the cost of running schools, hospitals, prisons, the Gardaí, the Army, social housing and the rest of public services.
Non-Profit Institutions Serving Households (NPISH) also have Final Consumption Expenditure to provide goods and services directly to households.
Final Consumption Expenditure is all spending on directly satisfying human needs and wants. Corporations do not have Final Consumption Expenditure because they do not directly satisfy human needs and wants. Intermediate Consumption Expenditure is different: it is used up in producing other goods and services.
Final Consumption Expenditure excludes Fixed Capital Investment which is used to buy fixed assets that are used in producing other goods. It also excludes other investment, like company shares, bank deposits, and pension contributions which are Financial Assets. Paying back a loan is reducing financial liabilities and payment of interest on loans is part of Investment income and not Final Consumption Expenditure.
Final Consumption Expenditure includes the VAT and other taxes on products that the consumer must pay. Other kinds of tax, like taxes on income, which have to be paid whether the income is spent or not, are not FCE.
Final Consumption Expenditure is part of Gross Domestic Product as calculated by the Expenditure Method. In the Annual National Accounts (ANA) and Quarterly National Accounts (QNA) it is called Personal Consumption Expenditure and Net Expenditure of Central and Local Government. In the Institutional Sector Accounts and Government Accounts it is called Final Consumption Expenditure of Households and Final Consumption Expenditure of Government. The Government part and the Household part are slightly different in the NIE and QNA.
The difference in presentation depends on whether "Market Production Purchased by General Government for Households’ Direct Use" is considered Government spending or Household Spending. For example, under the Drugs Payment Scheme, the government pays some of the costs of medicines bought in the pharmacy if a household spends more than a certain threshold in a month. In practice, the household pays the amount up to the threshold, and the government pays the rest directly to the pharmacy. The Government payment is Market Production Purchased by General Government for Households. For the NIE and QNA it is considered that the State provides the money to the households and the household pays the pharmacy. The Drug Payment Scheme spending is included in Personal Consumption Expenditure and excluded from Net Expenditure of Central and Local Government. In Government Accounts and Sector Accounts, the government's drug payment is included in Government FCE and excluded from Household FCE. The other significant Market Production Purchased by General Government include:
