General government deficit amounting to EUR 17.3 billion in the first half of 2009
WIESBADEN – According to provisional data of the Federal Statistical Office (Destatis), net borrowing of general government amounted to EUR 17.3 billion in the first half of 2009. After a general government surplus of just over EUR 7 billion was recorded in the same period a year earlier, the economic and financial crisis had a substantial effect on the budgets of the Federation, Länder and municipalities and also on the social insurance budget. For the first time since 2004, a decline of 1.1% was observed in revenue, while general government expenditure increased 3.5% in the first six months of 2009.
WIESBADEN– According to provisional data of the Federal Statistical Office (Destatis), net borrowing of general government amounted to EUR 17.3 billion in the first half of 2009. After a general government surplus of just over EUR 7 billion was recorded in the same period a year earlier, the economic and financial crisis had a substantial effect on net lending/net borrowing of central, state and local government as well as on social security funds. For the first time since 2004, a decline of 1.1% was observed in revenue, while general government expenditure increased 3.5% in the first six months of 2009.
Regarding revenue, in particular tax revenue (which accounts for about half of the total revenue of general government) declined in the first six months of 2009 (–3.8%) compared to the same period of the previous year. In this context, a particularly strong decline was recorded for revenue from income and wealth tax, which fell 6.7% in the first half of 2009. This result was especially due to a substantially decreasing revenue from corporation tax (–46.0%) and from taxes received from the rest of the world (–26.8%). In contrast, the decline in revenue from income and wealth tax paid by households was relatively moderate (–2.1%), mostly owing to the fact that the effects of last year’s judgement of the Federal Constitutional Court on the commuter allowance had been included in the national accounts in 2008 already. Revenue from taxes on production and imports, too, was smaller in the first six months of 2009 (–1.0%). However, general government revenue increased in particular with respect to social contributions (+3.4%), sales (+0.8%) and property income (+4.5%), which includes interest received, transferred Bundesbank profit and other dividends and rents.
Regarding expenditure, marked increases were observed in all major expenditure items. In particular, expenditure for intermediate consumption (+7.3%), social benefits in kind (+5.0%) and social benefits other than social transfers in kind (+4.4%) recorded above-average increases. The two latter expenditure items reflected several reforms or special provisions such as the reform of fees payable to physicians in private practice, the proportionate growth rate of wage increases being accounted for in the pricing system (Land base case values) of hospitals, the rise in the children’s allowance, and the one-time child bonus. The increase of subsidies (+11.2%) is mainly due to the Federal Employment Agency’s reimbursement of social insurance contributions for short-time workers payable by enterprises. In the first six months of 2009, lower expenditure was recorded for property income paid (–5.8%), other transfers (–4.8%) and capital transfers (–2.9%). The latter had been higher one year earlier, among others because of the recording of several government interventions to support banks.
When put in relation to the gross domestic product at current prices (EUR 1,168.3 billion), a deficit ratio of –1.5% is obtained for the first half of 2009 from net lending / net borrowing of general government. On 15 July 2009, the Statistical Office of the European Communities (Eurostat) published a Decision on the recording of certain public interventions to support financial institutions during the financial crisis. The Decision is binding for calculating the net lending/net borrowing of general government. The Federal Statistical Office has implemented the provisions resulting from the Decision and corrected the results for reference years 2007 and 2008 as follows:
Net lending / net borrowing of general government in EUR billion
Reference year
before
new
2007
–4.2
4.7
2008
–3.2
1.0
Thus there was net lending of general government both in 2007 and in 2008.
The data are based on definitions of the European System of Accounts (ESA) 1995. The data do not cover revenue/expenditure relating to swap transactions. Hence they are not comparable to the annual data which are relevant for the European procedure to be applied in the case of an excessive deficit of general government (Maastricht Treaty).
For further information please call: Thomas Forster, tel: (+49-611) 75-2795,
