Press 1st half of 2016: general government achieves surplus of 18.5 billion euros

Press release No. 292 of 24 August 2016

WIESBADEN – Net lending of general government amounted to 18.5 billion euros in the first half of 2016 according to provisional results of the Federal Statistical Office (Destatis). When measured as a percentage of the gross domestic product at current prices (1,543.5 billion euros), this results in a ratio of +1.2%. These figures are based on the definitions of the European System of Accounts (ESA) 2010. The budgets of central government, state government, local government and social security funds continued to benefit from both a positive development of employment and economy and moderate spending policies. However, the results for the first six months allow only limited conclusions to be drawn regarding the annual result as, due to structural factors, net lending/net borrowing of general government is normally lower in the second half of a year.

Just under half of the general government surplus was achieved by central government, which recorded a surplus of 9.7 billion euros in the first half of 2016. State government recorded a surplus of 0.4 billion euros. The surplus of local government amounted to 2.5 billion euros. Social security funds achieved a surplus of 5.9 billion euros in the first half of 2016.

The revenue of general government in the first half of 2016 rose to 692.9 billion euros, which was an increase of 27.9 billion euros (+4.2%) year on year. The most important source of government income is taxes, which amounted to 365.1 billion euros, thus accounting for a good half of total revenue. The increase in tax revenue continued to be high (+4.8%) in the first half of 2016, with the rise in current taxes on income, wealth, etc. (+6.1%) being just under twice as high as the increase recorded for taxes on production and imports (+3.3%). The rise in taxes on production and imports was largely due to increasing VAT receipts. The latter rose by 3.7 billion euros (+3.6%) to stand at 107.2 billion euros. Also, social contributions paid to general government were markedly up by 4.2% to 253.0 billion euros. A decline was however recorded in government revenue from interest and dividends received (–10.9%), one of the reasons being that the Bundesbank profit recorded in national accounts was markedly down.

Government expenditure in the first half of 2016 was up by 3.6%, or 23.5 billion euros, to stand at 674.4 billion euros. Large increases in expenditure were recorded for intermediate consumption (+9.2%) and for social benefits in kind (+6.7%). The increase in intermediate consumption was mainly due to higher expenditure on persons seeking refuge, while the rise in social benefits in kind is a result of higher expenditure on public assistance/public youth welfare and on benefits for asylum-seekers. The increase in government investment expenditure (+7.7%) was markedly higher than in the previous year. Due to the continuing very low interest rates and lower debt, interest payments decreased considerably again (–13.8%).