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Boom times for Germany’s public finances.
The country’s budget surplus swelled to its highest in the post-reunification era last year, in figures that are likely to embolden critics of economic policy in Europe’s largest member state.
Official figures from Destatis show the German surplus – the difference between what the government spends and receives in taxes – climbed by over 13 per cent to €23.7bn in 2016 – the highest since the Berlin wall came down in 1989.
It is the third consecutive year that Germany’s coffers have been in the black, with the annual figure coming in at 0.8 per cent of GDP – the best since the euro was introduced as a physical currency in 2000.
Total government spending came in at €1.41tn last year while expenditure was €1.38tn. Revenues last year were higher across every government department, said Destatis.
The figures will be a boon to Germany’s ruling Christian Democrats in a key election year. Angela Merkel’s centre-right government has enshrined a balanced budget rule into the country’s constitution and long prided itself on its fiscal rectitude. Germany heads for presidential elections in September.
But the country’s public finances have long been the source of tension between its fellow eurozone member states, Brussels, and the International Monetary Fund. They have all urged Berlin to loosen its purse strings to boost domestic growth which will in turn support demand across the single currency area.
International attention was drawn to Germany’s dominant position in the EU after a senior poilcymaker in the new Trump administration accused Berlin of exploiting a “grossly undervalued” exchange rate.
In its latest assessment of its public finances, the EU said Germany’s current account surplus (a balance of goods and income with the rest of the world) was “not healthy” and the source of “significant distortions” within the 19-country bloc. The current account surplus is on course to hit a record 8.7 per cent in 2016, according to EU forecasts.
But German finance minister Wolfgang Schäuble has defended Germany’s stellar finances as a source of strength in an ageing economy which will be absorbing a record number of refugees this year.
Earlier today, Destatis confirmed the German economy grew by 1.9 per cent last year – its best rate since the height of the eurozone crisis in 2011. It means Germany holds the title of the world’s fastest growing developed world economy.