Sustainable development in Germany - 17 Goals to Transform our World

Government debt – Consolidating public finances – creating intergenerational equity

Indicator 8.2.a, b: Government deficit, structural deficit

a) Government deficit Weathersymbol

(Evaluation of the year 2019 as reporting year from indicator report 2021)

b) Structural deficit Weathersymbol

(Evaluation of the year 2019 as reporting year from indicator report 2021)

Selection

Select here what should be displayed in the chart and in the table.

This overview includes additional information on the indicators presented above, such as a brief definition of the indicator and a description of the politically determined target value, as well as the political intention for selecting the indicator.

Definition of indicators (Taken from the official translation of the German Sustainable Development Strategy)

The indicators show the financial balance of general government (deficit or surplus) and the structural financial balance as a percentage of gross domestic product (GDP) at current prices. The public financial balance is calculated as government revenue minus government expenditure, measured on a national accounts basis. The annual structural balance refers to the part of the financial balance that is not attributable to cyclical fluctuations and temporary effects.

Target and intention of the German Government (Taken from the official translation of the German Sustainable Development Strategy)

Sound public finances are an essential element of a sustainable fiscal policy. A policy that relies too heavily on borrowing to fund current public expenditure and then passes this debt on to future generations is simply not sustainable.

According to the convergence criteria for the European Union, known as the Maastricht criteria, the annual government deficit should be less than 3% of GDP. The structural deficit must not exceed 0.5% of GDP. These are the stipulations of the European Stability and Growth Pact. The guiding principle of the structurally balanced budget has also been enshrined in Germany’s Basic Law since 2009 (Article 109, referred to as the debt brake).

Data state

The data published in the indicator report 2021 is as of 31.12.2020. The data shown on the DNS-Online-Platform is updated regularly, so that more current data may be available online than published in the indicator report 2021.

Last modification of code (data) 2021-06-30: see changes on GitHub opens in a new window
Last modification of code (text) 2021-09-10: see changes on GitHub opens in a new window

Taken from the official translation of the German Sustainable Development Strategy

The method used to calculate GDP and the financial balance of general government is laid down in the European System of National and Regional Accounts (ESA) and is applied by the Federal Statistical Office. The structural financial balance, on the other hand, is determined by the Federal Ministry of Finance. The calculation of government net borrowing takes into account the finances of the public authorities, that is to say the Federal Government, the Länder and local government, and the finances of the social insurance system.

In contrast to the previous indicator report, the national accounts calculations were reviewed and revised in 2019 as part of their periodic major revision, and the reference year was changed to 2015. As a result, nominal GDP figures are slightly lower on average than they were before the major revision of 2019. The overall economic picture, however, has remained largely unchanged.

In 2012, the Government achieved an overall surplus of EUR 0.3 billion, which was the first positive balance since the financial and economic crisis of 2008/2009. In 2019, the financial surplus amounted to EUR 52.5 billion and 1.5% of GDP (preliminary data). The federal surplus came to EUR 22.7 billion. At the same time, Länder yet again recorded an aggregate surplus (EUR 16.4 billion). The balances for local government (EUR 5.1 billion) and the social insurance fund (EUR 8.7 billion) were also positive. The national budget in 2019 showed a structural surplus of 0.6% of GDP (preliminary data). This meant that the EU convergence criteria for both the government deficit and the structural deficit had been met ever since 2012.

Given the economic repercussions of the COVID-19 pandemic and the government support measures, however, bodies such as the German Council of Economic Experts are already forecasting a negative financial balance in the forthcoming accounts for the 2020 and 2021 reporting years. This development has not yet been factored into the current status calculation and so has had no bearing on the displayed weather symbol. A valid assessment will not be possible until the figures for 2020 have been presented.

Over the entire period from 1991 to 2019 the growth of government revenue (134.7%) exceeded that of GDP (117.5%) at current prices as well as expenditure growth (111.4%). Government revenue as a proportion of GDP therefore increased from 43.3% to 46.7%.

The largest item on the expenditure side of the national accounts is monetary social benefits. These rose by 131.5% from 1991 to 2019, thus exceeding the GDP growth rate of 117.5%. Around 70% of monetary social benefits fall under the heading of social insurance, primarily in the form of pensions and unemployment benefits. As a proportion of GDP, monetary social benefits fell from 18.5% in 2003 to 15.8% in 2019, which is chiefly due to a steep decline in payments from the unemployment insurance fund. These payments fell by about EUR 22.6 billion between 2003 and 2019 as a result of the Hartz welfare legislation and an upturn in the job market.

This summary table illustrates the evaluations of the indicator by status of previous years. This shows whether the weather symbol for an indicator has been stable or rather volatile in the past years. (Evaluations from the indicator report 2021)

Time series 1

Indicator

8.2.a Government deficit

Target

Annual government deficit less than 3% of GDP, to be maintained until 2030

Year

2016

2017

2018

2019

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Time series 2

Indicator

8.2.b Structural deficit

Target

Structurally balanced government budget, general government structural deficit must not exceed 0.5% of GDP, to be maintained until 2030

Year

2016

2017

2018

2019

Evaluation Keine Bewertung möglich Keine Bewertung möglich Keine Bewertung möglich Keine Bewertung möglich

Source 1

 Federal Statistical Office

Organisation

Federal Statistical Office

Data source Publications/Domestic Product - First annual results opens in a new window

Source 2

 Federal Ministry of Finance

Organisation

Federal Ministry of Finance