Public finance

Since the 1950s, public expenditure in the overwhelming majority of cases has exceeded revenue so that, except for a few years, public budgets have recorded financial deficits. In the time span since German reunification, public debt has more than tripled.

In 2000 public budget recorded a financial surplus of EUR 18.6 billion because the Federation achieved one-time proceeds of EUR 50.8 billion from an auction sale of mobile phone licences. The financial deficits grew to EUR 74.0 billion in 2003. Due to markedly larger revenue from taxes and similar charges, the financial deficit decreased continuously to EUR 14.7 billion in 2006. In 2007, public budget revenue even exceeded expenditure, so that a financial surplus of EUR 9.0 billion was obtained. In 2008, however, the public budgets recorded another financial deficit of EUR 4.2 billion, which rose to EUR 106.9 billion in 2009. This was the highest financial deficit ever recorded for public budgets. Against the background of the slowly abating financial-market and economic crisis, the financial deficit of the overall public budget was down to Euro 78.1 billion in 2010.

In terms of public finance statistics, the financial balance of public budgets is defined as the difference between actual expenditure and actual revenue, taking into account internal offsetting. The balance shows the extent to which public budgets were able to fund their expenditure by revenue achieved in a given period. If the amount of public expenditure exceeds revenue, public budgets are faced with a financial deficit, which must be balanced either by outside funds (for instance, borrowing) or by the use of own reserves. By contrast, if public revenue exceeds expenditure in a given reference period, the public budgets record a financial surplus, which happened rarely as long as the Federal Republic of Germany has existed.

On 31 December 2009, debt (Credit market debt and loans for strengthening cash resources) of the overall public budget amounted to EUR 1,694.4 billion, which was 7.4% more than at end of 2008. Of that sum, the Federation accounted for EUR 1,053.8 billion (62.2%), the Länder for EUR 526.7 billion (31.1%) and municipalities/ associations of municipalities for EUR 113.8 billion (6.7%), always including the relevant extra budgets.

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