Indicator 8.2.a, b Government deficit, structural deficit

Text from the Indicator Report 2022 

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 2012, the Government achieved an overall surplus of 0.3 billion euros, which was the first positive balance since the financial and economic crisis of 2008/2009. Financial balance increased to 65.6 billion euros or 1.9 % of GDP until 2018. In 2019, the financial surplus amounted to 53.2 billion euros and 1.5 % of GDP (preliminary data). A financial deficit in 2020 and 2021 emerged in consequence of the COVID-19 pandemic. The deficit in 2020 amounted to 147.6 billion euros. Since 1991, only 1995 had a higher deficit (178.7 billion euros). A European comparison of financial deficits in 2021 reveals that Germany’s negative financial balance of 3.7 % of GDP was below European average of 4.6 %. Twelve countries had a lower deficit ratio than Germany; 14 countries were above. Denmark (+ 3.6 %) and Luxembourg (+ 0.8 %) even generated a financial surplus.

In 2021, the Government generated an overall deficit of 134.3 billion euros. The federal deficit came to 145.9 billion euros. At the same time, Länder, local governments and social insurance yet again recorded an aggregate surplus. The balances for the Länder (2.8 billion euros), the social insurance fund (4.3 billion euros) and local government (4.6 billion euros) were also positive. The national budget in 2021 showed a structural deficit of 2.5 % of GDP (preliminary data). This meant that the EU convergence criteria for both the government deficit and the structural deficit had not been met in 2021 as previous year: in 2020, the federal deficit was 87.4 billion euros, that of the Länder was 30.9 billion euros and social insurance fund 34.8 billion euros. Only local governments reported a surplus of 5.5 billion euros in 2020.

In 2020, government revenues decreased for a short time, however, they increased again in 2021 and were 5.9 % above the value in 2019. Government spendings increased by 18.1 % in the same period. The largest item on the expenditure side of the national accounts are social benefits other than social transfers in kind. These accounted for 33.1 % of government spendings (610.9 billion euros). Social benefits in kind accounted for 17.9 % (330.0 billion euros). 70.4 % of social benefits other than social transfers in kind fall under the heading of social insurance, primarily in the form of pensions (340 billion euros); spendings on social benefits in kind predominantly incurred for statutory health insurance (249.9 billion euros).

The synoptic table provides information about the evaluation of the indicator in previous years. It shows if the weather symbol assigned to an indicator was rather stable or volatile in the past years. (Evaluation of the Indicator Report 2022 )

Indicator	8.2.a Government deficit
Target	Annual government deficit less than 3 % of GDP, to be maintained until 2030
Year	2018	2019	2020	2021
Evaluation

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	2018	2019	2020	2021
Evaluation