Press release No. 071 of 24 February 2023
WIESBADEN – The financial deficit (net borrowing) of general government amounted to 101.3 billion euros in 2022 according to provisional calculations of the Federal Statistical Office (Destatis). Overall, the new burdens caused by the impact of the Russian war of aggression in Ukraine overlapped the government budget relief due to the ending of Covid-19 measures. The deficit thus remains high although it fell by 32.9 billion euros on the previous year. When measured as a percentage of gross domestic product (GDP) at current prices, the deficit ratio was 2.6% in 2022. This means that the 3% reference value of the European Stability and Growth Pact, which is currently suspended, would have been met again after two years.
Revenue rose by 6.4%, expenditure by 4.1% compared with 2021
The financial deficit (net borrowing) of general government is the difference between revenue (1,820.8 billion euros) and expenditure (1,922.1 billion euros). The year-on-year decrease in the financial deficit is due especially to a sharp 6.4% increase in revenue and a smaller increase in expenditure of 4.1%.
Central government records financial deficit of 129.2 billion euros
As in the previous year, the financial deficit of general government in 2022 was due to the financial deficit of central government. The latter decreased just slightly, which is due to new relief packages adopted because of the impact of war in Ukraine and the energy crisis. The central government financial deficit amounted to 129.2 billion euros in 2022, falling by 16.7 billion euros on the previous year. The financial surpluses of state government (12.4 billion euros), local government (8.8 billion euros) and social security funds (6.7 billion euros) were up in 2022 from the previous year.
Strong increase in tax revenue on 2021
Tax revenue rose by 8.0% in 2022 due to the general economic recovery after the Covid crisis and high inflation. As regards taxes to be paid by enterprises, large increases were recorded especially for corporation and trade tax revenue (+11.1% and +13.6%, respectively). The positive development in the labour market was reflected by an increase in wage tax (+6.4%). The increase in household final consumption expenditure caused by Covid restrictions being abolished contributed to an increase in value-added tax revenue by 10.8%.
Rising expenditure in connection with energy crisis
General government expenditure in 2022 was strongly affected by the impact that war in Ukraine has on the global energy market. Expenditure on subsidies fell considerably (-34.8%), mainly because various Covid measures such as Covid-related interim financial help ended. However, current transfers were up 25.4% as a result of relief packages adopted as a reaction to rising energy prices. This includes the energy price allowances for persons employed and pensioners, for example. Capital transfers were up, too (+34.2%), one of the reasons being measures taken to ensure energy supply such as the promotion of LNG terminals construction or financial support for energy companies.
Marked increases were also recorded for expenditure on international cooperation payments (+37.2%), particularly due to the financial support for Ukraine, as well as interest payments (+25.8%).
More information:
The European statistical office Eurostat provides data on European government finance on its website.
Current data on the Federal Government’s economic stimulus package (only in german) aimed at overcoming the Covid crisis and many other indicators on economic, financial, health and mobility topics are provided through the data portal “Dashboard Deutschland” (www.dashboard-deutschland.de) of the Federal Statistical Office.
Methodological notes:
Generally, granting loans or guarantees has no immediate effect on the financial balance (net lending/net borrowing) of general government as defined by the System of Accounts (ESA 2010). In national accounts, they are recorded with an effect on the deficit only if there definitely is a default on a loan or if a guarantee is definitely called upon.
