German deficit shrinks by €1.3b in H1 ’24

Germany’s general government deficit reached €38.1 billion in the first half of 2024, marking a decrease of €1.3 billion compared to the same period in 2023, according to provisional data released on Tuesday.

The deficit, representing 1.8 per cent of GDP, reflects a slower pace of expenditure growth relative to revenue increases.

The federal government accounted for the largest portion of the deficit, recording a financing shortfall of €24.6 billion, though this was significantly reduced by €17.9 billion from the previous year.

However, the deficits for the states and municipalities increased, with the Länder’s deficit rising to €7.2 billion and the municipalities’ to €6.4 billion.

Revenue growth, fuelled by a robust labour market and rising tax and social contribution receipts, outpaced expenditures, which saw a moderate increase.

Notably, government interest income rose by 19.3 per cent, while subsidies dropped sharply by 39.8 per cent due to the expiration of energy price relief measures.

Overall, while government revenues increased by 4.7 per cent, expenditures grew by 4.4 per cent, highlighting the ongoing fiscal challenges amidst economic pressures and policy adjustments.