To cushion the economic impacts of crises, the German state spent significantly more money than it received in 2023. As announced by the Federal Statistical Office on Friday, the deficit of the federal government, states, municipalities, and social insurance amounts to a total of 87.4 billion euros. Compared to the first estimate in January, this represents an increase of 4.7 billion euros. The deficit ratio is thus at 2.1 percent of the gross domestic product and therefore remains below the upper limit of three percent set by the EU.
In spite of the comparatively high deficit, new borrowing has decreased by 9.5 billion euros compared to the previous year. This is primarily due to the increased revenues of the state, which rose by 4.4 percent to a total of 1901.8 billion euros. Here, record employment led to a 6.6 percent increase in social security contributions. On the other hand, tax revenues were comparatively weak with only 0.7 percent growth.
The reasons cited for the lower tax revenues are the weak overall economic development as well as extensive relief measures for citizens and businesses. These include, among other things, the Inflation Compensation Act, the reduction of the VAT rate for gas, and the extension of the reduced VAT rate for meals in the catering industry.
State Spending Increased by 3.7 Percent to a Total of 1989.2 Billion Euros. Interest Expenditures Soared by 36.2 Percent Due to Higher Prime Interest Rates. The Higher New Borrowing is Largely Attributable to the Federal Government, Which Had a Financing Deficit of 79.0 Billion Euros. However, the Deficit was 45.3 Billion Euros Smaller Compared to the Previous Year, Due to Expiring Measures Related to the Coronavirus Pandemic and Energy Crisis.
In the past year, the federal states (6.4 billion euros) and municipalities (12.1 billion euros) also posted deficits, whereas they had generated surpluses in the previous year. Social insurance, on the other hand, was able to record a slight increase in the financial surplus by 10.0 billion euros.
For the current year, experts predict a decreasing new debt, also due to the federal government's austerity measures because of the Federal Constitutional Court's ruling on the debt brake. Similarly, high prices and wage agreements could lead to an increase in tax revenues.
