Germany's Budget Deficit Surges to 6.2 Billion Euros
The financial outlook for German municipalities is grim, with limited control over income and expenditure. The Budgetary Office (BMF) initially forecast a deficit of 4.8 billion euros but now expects 6.2 billion. The federal government's deficit is projected to be 23.2 billion euros, 1 billion more than expected. States, municipalities, and social security are worse off than anticipated, contributing to the increased deficit.
The BMF's revised forecast suggests optimism in its initial calculations. The deficit is now expected to be 6.2 billion euros, 1.4 billion more than the initial estimate. Poor budget execution is seen in states like Berlin, Bremen, and Saarland. The federal government's budget path foresees a deficit of 4.5 percent of the GDP this year. The improved economic situation, with a nominal GDP increase of 15 billion euros, is expected to offset the higher deficit.
Finance Minister Markus Marterbauer and State Secretary for Finance Barbara Eibinger-Miedl presented the federal government's budget execution for the first eight months and the first two quarters of other regional authorities. The federal government is 807 million euros better than expected in its budget, with a deficit of 23.2 billion euros. However, the states and municipalities are expected to exceed their planned deficit by 1.378 billion euros, and social security by 441 million euros.
Neos budget spokeswoman Karin Doppelbauer emphasizes the need for spending discipline by the federal government, states, municipalities, and social security to meet the EU expenditure rule. Despite an improved economic situation, the increased deficit highlights the need for careful fiscal management. The federal government's budget is performing better than expected, but regional authorities face larger deficits than planned.
