Press release No. 295 of 25 August 2017
WIESBADEN – Net lending of general government amounted to 18.3 billion euros in the first half of 2017 according to provisional results of the Federal Statistical Office (Destatis). When measured as a percentage of the gross domestic product at current prices (1,599.0 billion euros), this is a surplus ratio of +1.1%. These figures are based on the definitions of the European System of Accounts (ESA) 2010. The budgets of central government, state government, local government and social security funds continued to benefit from both a positive development of employment and economy and moderate spending policies.
However, only limited conclusions can be drawn for the annual result from the results for the first half-year since net lending/net borrowing of general government is influenced by different factors over the year.
The general government surplus was not distributed evenly among the various levels of government. While central government recorded a deficit of 2.5 billion euros, state government (+8.1 billion euros), local government (+6.1 billion euros) and social security funds (+6.6 billion euros) achieved a surplus in the first six months of 2017. The central government deficit is mainly due to the consequences of the Federal Constitutional Court ruling which established the unlawfulness of the nuclear fuel tax. The resulting repayments to energy companies totalled approximately 7.1 billion euros.
The revenue of general government rose by 29.6 billion euros (+4.3 %) to 723.8 billion euros in the first half of 2017 on the same period a year earlier. The most important source of government income is taxes, which amounted to 384.2 billion euros, thus accounting for a good half of total revenue. The increase in tax revenue continued to be high (+5.4%) in the first half of 2017, with the rise in current taxes on income, wealth, etc. (+6.7%) being nearly twice as high as the increase recorded for taxes on production and imports (+3.8%). Higher VAT receipts, which rose by 4.6 billion euros (+4.3%) to stand at 111.8 billion euros, were the main reason for the rise in taxes on production and imports. Also, social contributions paid to general government were markedly up by 4.7% to 265.4 billion euros. A decline was however observed in government revenue from interest and dividends received (–19.5%), one of the reasons being that the Bundesbank profit recorded in national accounts was markedly down.
Government expenditure in the first half of 2017 was up by 4.3% or 28.8 billion euros to stand at 705.4 billion euros. Marked increases in expenditure were recorded for social benefits other than social transfers in kind (+4.8%). The Nuclear Fuel Tax Act ruling is reflected by an increase in capital transfers of just under 30%. In contrast, the rise in government investment expenditure was below average in the first half-year (+2.7%). Due to the continuing very low interest rates and lower debt, interest payments decreased once more (–5.2%).