The German state’s deficit fell significantly last year despite the economic crisis. Expenditure in the core and extra budgets of the federal, state, local and social security funds exceeded income by 91.9 billion euros, as the Federal Statistical Office announced on Friday. The minus was 35.4 billion euros less than in 2022. It was below the 100 billion mark for the first time since the corona-related record deficit of 189.2 billion euros in 2020.
Expenditure grew by around 4.1 percent to around 1,952 billion euros. Revenues increased more strongly, by 6.4 percent to 1,860 billion euros. The strong increase in social security contributions of 6.3 percent contributed to this, while tax revenue increased by 2.2 percent. As in previous years, the deficit was largely borne by the federal government (-87.6 billion euros). For the first time in years, the municipalities also recorded a deficit (6.8 billion euros), while the states’ income and expenditure were almost balanced and the social security system had a surplus of 2.7 billion euros.
Interest costs have risen significantly. For the federal government alone, interest expenses for loan market funds rose by 29.3 billion to 46.7 billion euros. This corresponds to more than two and a half times the expenditure in 2022. The reason for this is that the European Central Bank (ECB) has raised its key interest rates sharply in the fight against inflation. Interest expenses also rose for states and municipalities, but more moderately by 13.1 percent to 10.5 billion euros and by 41.4 percent to 2.9 billion euros. On the other hand, at 13.7 billion euros, the federal government also received around twice as much interest from other areas as in 2022.
The federal government spent significantly less on ongoing allocations, grants and debt service assistance – which essentially went to the states. “Above all, the decline in Corona business aid, which was paid out primarily via the federal states, and in Corona-related allocations to the health fund were reflected here compared to 2022,” said the statisticians. In contrast, federal subsidies to other areas rose by more than 18 percent to 115.7 billion euros. This is where energy aid such as the electricity and gas price cap for private households and companies has an impact.