The state’s debt is rising, but the debt ratio is falling.
Germany’s mountain of debt continued to grow last year. According to calculations by the German Bundesbank, national debt increased by 62 billion euros to 2.62 trillion euros. According to preliminary information, the increase was similar to the previous year, but significantly weaker than in previous years. The debt of the federal government, which supported consumers and companies with state caps on gas and electricity prices, grew by 75 billion euros. The federal states’ debts, on the other hand, continued to decrease.
The debt ratio, i.e. the ratio of debt to nominal gross domestic product (GDP), fell for the second year in a row to 63.7 percent. However, this was the fourth time in a row that Germany exceeded the maximum limit of 60 percent agreed in the European Maastricht Treaties. Germany last fell below the mark in the pre-Corona year of 2019 with a value of 59.6 percent.
The Bundesbank attributed the decline in the debt ratio by 2.4 percentage points last year to the increase in nominal gross domestic product, which grew by 6.3 percent, particularly due to high inflation. “This in itself reduced the debt ratio by 4 percentage points,” explained the central bank. Adjusted for price increases, German economic output shrank last year.
Source: Stern
