Federal Statistical Office: State records record surplus in 2018

For the fifth year in a row, the German state has taken more money than spent. The federal government, states, municipalities and social insurances achieved a record surplus of 58 billion euros. It was smaller than expected.

Despite the slowdown in the economy last year, the German state posted a record surplus. The federal government, states, municipalities and social security funds received 58 billion euros more than they spent in 2018, according to the Federal Statistical Office . In a first estimate, the authority had badumed 59.2 billion euros. In terms of economic output, the most was 1.7%. The Treasury benefited from higher tax revenues and social contributions, also thanks to the historically favorable situation in the labor market.

Far from deficit limit

Germany posted a surplus for the fifth year in a row, far from the deficit limit set by the Maastricht Treaty. Europeans admit at most a budget deficit of 3.0% of economic output. Germany had last booked in 2013, although minimal.

The highly flexible monetary policy of the European Central Bank (ECB), which is particularly controversial in Germany, also brings relief. Because of low interest rates, the state can borrow cheaply. However, because of the economic downturn, the federal government is threatening a 25 billion budget deficit by 2023. The Ministry of Finance predicts about five billion euros less in tax revenue per year.

Europe's largest economy has clearly lost momentum in the second half of 2018. After the third quarter gross domestic product (GDP) declined 0.2% from the previous quarter, it stagnated in the end year, the Wiesbaden authority having confirmed a first estimate.

Expected economic growth of 1.0%

Exports are suffering from the storms of trade policy and the slowdown in the global economy. In addition, during the second half of the year, the automotive industry had to cope with the transition to the new WLTP exhaust and consumption standard and reduced water consumption due to the summer heat, which hindered the transportation of many goods. For the year 2018, the German economy grew by 1.4%. This was significantly less than during the prosperous years of 2016 and 2017, with an increase of 2.2% each. The federal government is forecasting economic growth of 1.0% this year.