Germany runs public deficit on virus spending, revenue fall

Agence France-Presse

Posted at Aug 25 2020 05:12 PM

FRANKFURT, Germany - Germany, long adverse to being in the red, on Tuesday posted a public deficit of 51.6 billion euros for the first half of 2020, with coronavirus lockdowns undercutting government revenue as it increased spending.

The economy posted a deficit of 3.2 percent of Gross Domestic Product in the 6 months to June, according to Germany's statistics agency Destatis, above the 3.0 percent limit under EU rules that Brussels suspended due to the pandemic. 

In the same period of 2019, Germany recorded a public surplus of 2.7 percent of GDP, or around 46.5 billion euros. 

Destatis revised upwards the GDP estimate for the three months to the end of June to show a contraction of 9.7 percent, better than the initially reported 10.1 percent slump. 

It is still "the sharpest decline since quarterly GDP calculations for Germany began in 1970," the agency said, worse than at the height of the financial crash, when GDP fell 4.7 percent in the first quarter of 2009.

For the first time since 2010, state revenue was down year-on-year, Destatis said, while government spending soared 9.3 percent as it tried to support the economy.

Last week, Finance Minister Olaf Scholz said that Germany will take on yet more debt in 2021 to lessen the impact of the pandemic, forcing it to suspend its cherished policy of keeping a balanced budget. 

Scholz previously said Germany planned to borrow around 218 billion euros in 2020 to help pay for a huge rescue package to steer the country through the coronavirus-induced downturn.