Status: 12/09/2022 5:12 p.m
According to a media report, the billions in gas and electricity price brakes will cause the state deficit to grow to 4.5 percent of gross domestic product in the coming year – that would be more than twice as much as planned.
Germany’s government deficit in 2023 will apparently be significantly higher than previously thought. According to information from the magazine “Der Spiegel”, the minus, i.e. the difference between income and expenditure in the current budget, will rise to 4.5 percent of gross domestic product (GDP), i.e. of total economic output. That would be more than double the original plan, the magazine reported, referring to calculation documents from the Federal Ministry of Finance for the Stability Council, which is meeting next week. The reason for the increase is primarily aid measures such as gas and electricity price brakes, it said.
With a deficit of 4.5 percent, Germany would be above the specifications of the European Union. The so-called Maastricht criterion stipulates that the general government deficit must not exceed three percent of GDP. In 2024, the deficit should drop to two percent and in the two following years be at 1.5 percent.
The decline comes about because the state aid is limited. The numbers in the federal budget are reflected accordingly. States, municipalities and social security funds have balanced budgets or make surpluses.
The debt ratio is also increasing
The debt ratio is likely to rise to 70 percent of GDP next year and fall to 68.5 percent a year later, Der Spiegel continues. In 2025 it should then be 67.5 percent, a year later at just over 67 percent.
The Treasury Department declined to comment on the report. In ministry circles, it was only conceded that the federal government’s relief measures would be reflected in the general government budget balance. “The federal government bears the main burden of the relief packages. When the measures expire from 2024, the general government deficit is expected to decrease accordingly.”