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FINANCE

Debt hits new record high

Despite revenue windfalls, Germany’s public debt has soared to record levels, with government now owing nearly €22,000 for every man, woman and child in the country.

Debt hits new record high
Photo: DPA

While Germany’s new debt arising from the financial crisis will not be as burdensome as was expected this year, it will still reach about €50 billion, latest calculations from the Finance Ministry show.

Bank bailouts, the extension of the subsidised Kurzarbeit scheme and extra money for heat insulation in schools and kindergartens, have all forced the federal government to dish out massive amounts of money.

New borrowing was expected to top €80 billion in 2010, but strong economic growth and increased tax revenues has relieved some of the pressure on the public purse.

“According to current assessments, a result of under €50 billion is possible by the end of the year with regard to new debt,” a monthly report from the Finance Ministry said.

Net borrowing by the government is nevertheless the highest by far in German history.

For 2011, the federal government has planned to take on new debt of €48.4 billion. Officials expect tax revenues to be 0.3 percent higher than last year.

The entire deficit of all public budgets – federal, state and municipal – climbed in the first nine months of the year by nearly €100 billion.

On September 30, the federal, state and municipal governments together owed about €1.79 trillion, according the Federal Statistics Office, which is nearly €100 billion – or 5.9 percent – more than at the end of 2009. Per person, it works out to €21,882.

The federal government owes the most money – just over €1 trillion, or a rise of 3.1 percent. However the states’ debt grew most quickly, by 11.6 percent or €61.4 billion, to owe €588.1 billion by the end of September.

DPA/The Local/dw

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FINANCE

German watchdog steps up monitoring of popular N26 online bank

Germany's financial watchdog on Wednesday ordered online bank N26 to step up "internal controls and safeguards" to prevent money laundering and terrorist financing, and said it was appointing a special representative to monitor progress.

German watchdog steps up monitoring of popular N26 online bank
An N26 card. Photo: Wikimedia Commons

Bafin’s announcement marks an escalation of previous warnings to the popular Berlin start-up, which has come under fire in the past for not properly verifying the identities of new customers.

“Bafin ordered N26 Bank GmbH to rectify deficiencies both in IT monitoring and in customer due diligence,” the regulator said in a statement.

N26 “is required to ensure that it has the adequate personnel, technical and organisational resources to comply with its obligations under anti-money laundering law,” it said.

A “special commissioner” would oversee the company’s efforts, Bafin added. Founded in 2013 and known for its transparent debit cards, digital bank N26 is one of Germany’s most high-profile financial technology or “fintech” firms and now has seven million customers in 25 countries.

Its rapid growth has rested in part on fast-track identity procedures for new customers.

READ ALSO: What is the digital German bank N26 that’s about to hit a million users?

In 2019, German business weekly WirtschaftsWoche said it had managed to open accounts using forged IDs.

N26 on Wednesday pledged to “work closely” with Bafin and the special representative.

It said it had already significantly increased measures to prevent money laundering in recent years, “but we recognise that more must be done in this area”.

The coronavirus crisis had contributed to a spike in fraudulent online transactions worldwide, N26 added, “increasing the demands placed on banks in the fight against crime”.

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