Involvement of the state in the domestic economy has long been considered as useful for enhancing public welfare in modern society. However, since the 1980s the expenditures devoted to support the domestic economy show a downward and converging development in most OECD countries. This development is examined by means of a comparative analysis over time. Three possible explanations are analysed: firstly, the politics of fiscal stringency in order to curb big government; secondly, the impact of trans-national pressure, in this case from the EMU; and thirdly, the impact of party politics and government in relation to budget choices that affect spending levels on state economic support. The analysis demonstrates that lower levels of state economic support are because of the development of total government outlays and consequently non-welfare or core expenditures are traded off in favour of welfare spending. Furthermore, EMU requirements affect this development. Finally, these developments vary cross-nationally owing to where a policy legacy of the Left (high levels of public spending) existed before the 1980s and where the Right is present in government after 1980. © 2010 Macmillan Publishers Ltd.