45,3 billion euros in the black: German state achieves budget surplus

45,3 billion euros in the black: German state achieves budget surplus

The gloomy warning signs of a recession may be mounting, but the German government is certainly not short of cash: in the first half of 2019, it recorded a budget surplus of 45,3 billion euros, according to early figures from the Federal Statistical Office (Destatis). 

Germany heading for 6th consecutive budget surplus

Destatis’ initial figures show that, altogether, the federal government, federal states and local authorities brought in 45,3 billion euros more in taxes and social security contributions than they spent in the first half of 2019 - a surplus of 2,7 percent of gross domestic product (GDP). It therefore looks like the German state is heading towards a budget surplus for the sixth year in a row. 

This surplus is calculated as the difference between revenue (791,8 billion euros) and government expenditure (746,5 billion euros) in the first half of 2019. Destatis writes that the increase is largely due to the ongoing favourable trend in employment in Germany

Good employment conditions boost government revenues

Indeed, government revenues increased by 24,6 billion euros (3,2 percent) for the first half of 2019, compared to the same period last year. Well over half of this revenue (415,4 billion euros) comes from taxation

Record employment rates and increasingly high salaries mean that both tax revenues and social security contributions increased, by 2,8 and 4,4 percent, respectively. With all levels of government recording a surplus, state expenditure for the first half of the year also increased by 4,3 percent. 

Global turndown puts pressure on German economy

Germany is thus far beyond the Maastricht Treaty’s budget deficit limit of 3 percent of GDP. The last time the German economy recorded a deficit - and even then a minimal one - was back in 2013. 

This strong financial status notwithstanding, experts agree that there are tough times ahead for Europe’s largest economy. The ongoing US-China trade war and the looming threat of a no-deal Brexit are all contributing to a global slowdown that disproportionately affects Germany’s export-dependant economy. With the Ifo Business Climate Index falling to its worst level in nearly seven years in August, the strength of the German economy is increasingly placed in jeopardy. 



Abi Carter

Abi studied History & German at the University of Manchester. She has since worked as a writer, editor and content marketeer, but still has a soft spot for museums, castles...

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