Public debt swells

Public debt swells
Photo: DPA
The global financial crisis pushed Germany's public debt up 7.1 percent in 2009 to €1.7 trillion ($2.3 trillion), official data showed Thursday, the second sharpest rise since World War II.

That hiked the national debt to just over 70 percent of gross domestic product (GDP), close to the European average.

Germany’s federal debt rose 6.9 percent to €1.1 trillion, due in large part to €36 billion linked to the government’s €500-billion rescue package to prop up the country’s stricken banks, the statistics office said.

Germany’s 16 states recorded an even bigger rise meanwhile, with their debt soaring 8.5 percent to €526.3 billion owing in large part to losses at public regional lenders that were hit hard by the crisis. Municipal debt gained 3.0 percent to €112.1 billion.

The data were preliminary and would be finalised later this year, the statistics office said.

The only time that Germany, Europe’s biggest economy, has posted a sharper rise was in 1995 as the government ploughed money into depressed former East Germany following German unification in 1990.

The 2009 level put Germany’s debt to GDP ratio at 70.3 percent according to a calculation based on published data, below a finance ministry forecast of 73 percent.

It breaches the 60 percent ceiling in the European Union’s Stability and Growth Pact however, while remaining below an estimated EU average of 73 percent published by the European Commission late last year. That rate climbed to 78 percent for the 16-nation eurozone.

Debt has become a major issue since it emerged that countries like Greece and Italy have allowed theirs to climb to more than 110 percent of national output, helping fuel a crisis over eurozone debt and deficits.

German debt could be higher still in 2010, with the government planning to borrow around €85 billion this year, the most ever, to finance stimulus measures and cover higher welfare costs.

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