Strong economy shrinks debt as share of GDP

Strong economy shrinks debt as share of GDP
Workers in a Volkswagen factory in Wolfsburg. Photo: DPA
Germany's total debt increased slightly in 2014, but because the economy grew, its proportion of overall output fell, the Bundesbank (central bank) said on Wednesday.

"According to provisional calculations, general government debt in Germany amounted to approximately €2.168 trillion at the end of 2014.

"The debt level thus increased by 2.0 billion on the year," the Bundesbank said in a statement.

But because gross domestic product also expanded, "the debt ratio, i.e., the level of debt in relation to GDP, decreased by 2.4 percentage points to 74.7 percent," the Bundesbank said.

Under EU rules, member states are not allowed to run up overall debt in excess of 60 percent of GDP.

The Bundesbank said that since 2010, general government debt in Germany had grown by a total of €91 billion, equivalent to 3.1 percent of current GDP, as a result of measures relating to the eurozone sovereign debt crisis.

"The cumulative effect of the support measures in favour of domestic financial institutions since 2008 amounted to €236 billion or 8.1 percent of GDP," the statement said.

Such effects decreased in the past two years, however, it said.

Under the European budgetary surveillance procedure, EU member states are obliged to submit data on their general government deficit and debt levels to the European Commission twice a year, at the end of March and end of September.

For this purpose, the federal statistical office calculates the public deficit, while the Bundesbank calculates the overall debt level.

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