Tags: Germany | Budget | Surplus | Crisis

Germany Posts Six-Month Budget Surplus, First Since 2008 Crisis

Thursday, 23 August 2012 07:11 AM

Germany reported a budget surplus between January and June, the first gain in its half-year account since 2008 and the start of the global banking crisis, a Federal Statistics Office report showed.

The fiscal balance sheet showed a surplus of 8.3 billion euros ($10.4 billion), equal to 0.6 percent of gross domestic product through June, the office said today. A surplus in social-insurance coffers of 11.6 billion euros outweighed a deficit of 3.3 billion euros caused by federal, state and municipal overspending, the Wiesbaden-based office said in an e-mailed statement.

Unemployment that declined nearly every month until April this year was “decisive” in creating the surplus, while tax revenue grew 2.9 percent in the first half compared with a year ago, according to the statement. Tax growth was slower than the 7.3 percent reported last August in the yearly comparison. Germany’s economy, Europe’s largest, posted growth of 0.3 percent in the second quarter, the office said today in a separate release.

The German economy may grow 0.7 percent this year, according to the government’s forecast.

Germany’s budget surplus will probably give Chancellor Angela Merkel a boost in her efforts to convince euro-area partners that what she dubs “growth-yielding” economic policy and fiscal rectitude pay dividends. Germany may run a composite deficit of 0.9 percent of GDP this year compared with a euro- area average of 3.2 percent, the European Commission forecast on May 11.

Budget Surplus

Germany last ran a full-year budget surplus in 2007. In 2008, with the bank crisis battering tax revenue and economic growth, the country reported a full year deficit.

Merkel is committed by constitutional amendment to show a national balanced budget by 2016. Germany’s 2011 first-half budget showed a deficit of 0.3 percent of GDP and a full-year deficit of 0.8 percent or 19.6 billion euros.

Germany’s composite budget statement comprises the balance sheets of three levels of government and social programs. The 16 states and the municipalities do not make group deficit projections.

Merkel’s 2012 federal budget was last revised in June and showed a forecast deficit of about 32 billion euros after the government opened a supplementary budget to pay for the new euro rescue fund called the European Stability Mechanism.

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Thursday, 23 August 2012 07:11 AM
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