Daily Management Review

Germany may face budget deficit in 2023


02/04/2019


Germany will face a budget deficit of € 25 billion by 2023, if it does not reduce costs, as tax revenues will decline, and wages in the public sector will increase. This was reported by the Bild newspaper with reference to an internal document of the government.



fdecomite via flickr
fdecomite via flickr
The deficit warning is contained in a report prepared by Finance Minister Olaf Scholz for his ministry colleagues who are getting ready to discuss budget planning.

As a result of the reduction in tax revenues, the German budget is expected to lose at € 5 billion per year.

According to Bild, during a meeting last week, the ministry officials were warned about the need to control spending. This is partly due to the rapid growth in public sector wage costs, which are expected to increase to € 35 billion in 2020 from € 31 billion in 2016.

The budget deficit of € 25 billion is less than 1% of Germany’s current GDP.

The potential occurrence of the budget deficit will be a sharp deterioration in the finances of Europe’s largest economy.

Last year, Germany recorded a budget surplus of € 11.2 billion.

Last week the German government announced a revision of forecasts for GDP growth rates in 2019. The authorities noted aggravation of external risks in the form of trade disputes between countries, as well as the UK exit from the EU.

According to government estimates, Germany’s GDP growth rate in 2019 will be only 1% compared with the previous forecast of 1.8%.

In case of implementation of the updated forecasts, the growth rates of the leading economy of the eurozone will become minimal since 2013. In 2018, according to preliminary estimates, the economy of Germany grew by 1.5%. 

source: bild.de






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