Increased income is not enough
Public debt doubles in the first half of the year
October 6, 2023, 1:04 p.m
Public budget revenues are growing, but are not sufficient to offset the increase in expenditure. On the contrary, the deficit is growing massively. The federal, state and local governments even doubled their deficit in the first half of the year compared to the previous year.
In Germany, the debt in the overall public budget more than doubled during the first half of the year compared to the same period last year. Overall, the federal government, states, municipalities and social insurance closed the first half of the year with a financing deficit of 76.1 billion euros, as the Federal Statistical Office announced. In the same period last year it was only 32.9 billion euros.
While expenses rose sharply at around eleven percent, income was unable to make up for this with an increase of around six percent. However, there were strong differences at different levels. The federal states’ budgets were almost balanced with a deficit of 0.1 billion euros. At the municipal level, the debt was 7.3 billion euros, while the federal government bore by far the largest share of the debt with a loss of 64.2 billion euros.
The recent sharp increase in interest rates for credits and loans was primarily reflected at the federal level. The federal government’s interest expenses increased by 411.5 percent compared to the same period last year to 29.3 billion euros – more than five times as much as the year before. For the federal states, interest expenses rose by just 15.8 percent to 5.6 billion euros.
For the municipalities, inflation compensation and higher social benefits played a significant role in the increase in the mountain of debt. The main reasons for the increased expenses were increased standard rates for citizens’ benefit and the inclusion of people seeking protection from Ukraine in the social benefits system. Overall, spending in this area rose by 11.8 percent or 3.9 billion to 37.1 billion euros in the first half of the year. In addition, the item of personnel expenses in the core budgets increased by 7.0 percent to 37.1 billion euros. The main reason for this was the 2023 collective agreement in the public sector and in particular the special payment to compensate for inflation in June. In the first half of 2022, the municipal deficit was only 1.6 billion euros.