Wednesday July 28, 2021
273 billion more than in 2019
Corona is driving national debt to a record high
The black zero is a thing of the past. The corona crisis is forcing the German state to dig deep into its pockets: The national debt last year amounted to 2,172.9 billion – 14.4 percent more than the year before. That is massive. But economically there is no need to worry, says an expert.
The expensive fight against the corona crisis and its economic consequences is driving the debt of the German state to a record level. At the end of 2020, the federal, state, municipalities and social security, including all extra budgets, were in the chalk with 2172.9 billion euros, according to the Federal Statistical Office. That is 14.4 percent or 273.8 billion euros more than a year earlier and the “highest debt level ever measured in the debt statistics at the end of a year”.
“The increase is due in particular at the federal and state levels to the measures taken to deal with the corona pandemic and, according to preliminary results, continued in the first quarter of 2021,” said the statistician. The total corresponds to a per capita debt of 26,141 euros. That is 3281 euros more than at the end of 2019.
“The rise in public debt in the 2020 Corona crisis was massive, but economically speaking, it is not a cause for concern,” said the scientific director of the union-affiliated IMK Institute, Sebastian Dullien. The debt ratio, i.e. the ratio of liabilities to annual economic output, is significantly lower than after the financial crisis in 2012 and is likely to decrease rapidly from 2022. In an international comparison, too, Germany’s rate is in the lower third.
“Rabid tax increases counterproductive”
“As has been seen in other countries in the euro crisis, hectic cuts in government spending or rabid tax increases to reduce the debt ratio are counterproductive,” said Dullien. They slow down economic growth.
The federal debt level rose particularly sharply. This grew by 18.1 percent to 1403.5 billion euros. The federal states saw an increase of 9.8 percent to 636.0 billion euros. The per capita debt was highest in the city-states, with it in Bremen at 57,823 euros, in Hamburg at 19,181 euros and in Berlin at 16,307 euros. Unlike the territorial states, the city-states also perform municipal tasks. Saxony had the lowest per capita debt at EUR 1244 and Bavaria at EUR 1359.
The municipalities’ debt grew by 1.5 percent to 133.3 billion euros. The social security liabilities, on the other hand, were reduced again and total 44 million euros. The statistics only include debts to the non-public sector, such as credit institutions and private companies at home and abroad.
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