Press release No. 324 of 25 August 2020
WIESBADEN – The financial deficit (net borrowing) of general government amounted to 51.6 billion euros in the first half of 2020 according to provisional results of the Federal Statistical Office (Destatis). Measured as a percentage of the gross domestic product at current prices (1,622.2 billion euros), this was a deficit ratio of 3.2% (in the first half of 2019: +2.7%).
After a surplus of 46.5 billion euros was recorded in the first half of 2019, the coronavirus pandemic significantly affected the budgets of central government, state government, local government and social security funds in the first six months of 2020. General government revenue showed a year-on-year decline -3.6%) for the first time since 2010. However, government expenditure rose by 9.3% in the first half of 2020. A financial deficit of general government in the first six months of a year was last recorded in 2011 after the financial market crisis.
The results are based on the definitions of the European System of Accounts (ESA) 2010. They form the basis for monitoring the budget situation in the EU Member States in accordance with the Stability and Growth Pact (Maastricht criteria). However, only limited conclusions can be drawn for the annual result from the results for the first six months. This is the more so this year as there are uncertainties regarding the development of the coronavirus pandemic.
Central government recorded the highest financial deficit (27.1 billion euros)
The financial deficit (net borrowing) in the first half of 2020 is the difference between revenue (766.7 billion euros) and expenditure (818.3 billion euros) of general government. All government levels recorded a negative financial balance (net lending/net borrowing). Central government recorded the highest financial deficit (27.1 billion euros). State government showed a deficit of 10.2 billion euros, social security funds of 7.8 billion euros and local government of 6.4 billion euros.
Small increase in social contributions, marked decline in taxes
On the revenue side, especially taxes, which account for roughly half of the total revenue of general government, declined in the first half of 2020 (-8.1%) on the same period a year earlier. A particularly strong decline was recorded for current taxes on income, wealth, etc. The relevant tax revenue was down by 10.2% in the first six months of 2020. This was largely the result of the sharp fall in taxes paid by businesses (-26.8%), especially in corporation and trade taxes. By contrast, the decline in current taxes on income, wealth, etc. that are paid by households was rather moderate (-4.7%). Revenue from taxes on production and imports decreased by 5.4% in the first half of 2020. However, general government saw a slight increase in revenue from social contributions (+1.8%).
Above-average rise in government subsidies
All expenditure items affected by the coronavirus pandemic showed substantial increases. Especially the emergency aid expenditure and payment of social security contributions during short time work contributed to the strong increase in subsidies (+177.5%), while the acquisition of protective equipment was reflected in intermediate consumption (+17.3%). The above-average increase in the volume of paid social benefits other than social transfers in kind (+6,7%) was also due to the strongly increasing short-time work.
Methodological notes
Corona emergency aid in the form of loans, participating interests or guarantees generally has no immediate effect on net lending/net borrowing of general government as defined by ESA 2010. Tax deferrals neither have an impact on net lending/net borrowing in the national accounts. The latter present the economic values created in a given period rather than the payment flows during that period.
As is true for all components of the national accounts, the greater uncertainties caused by the coronavirus pandemic may lead to larger revisions than usual.
European data
Eurostat, the Statistical Office of the European Union, provides government finance data for Europe.
German EUCouncil Presidency
As of 1 July, the Federal Statistical Office has been responsible for organisingwill organise the meetings of the Council Working Party on Statistics to be held during Germany’s EU Council Presidency under the chairmanship of its President Dr. Georg Thiel. Information on our activities during the Presidency of the Council of the Germany’s EU is provided at destatis.de/eu2020.
European statistics are available under „ Europe in figures“ on our website at www.destatis.de/europa
