The German public deficit will widen to 3.25% in 2023, compared to 2.5% forecast for this year, due in particular to the energy crisis that is pushing Berlin to spend generously to maintain their homes and businesses, he said the finance minister this Friday.
“For this year the projections are for a 2.5% deficit. Next year (…), we will see a deficit of 3.25%”, Christian Lindner indicated during a press conference. The deficit could even reach 4.5% in 2023, depending on the “spending scale” aimed at blocking “gas and electricity prices,” he added. “We made a huge effort during the crisis to relieve people and avoid structural ruptures,” commented Christian Lindner to justify this widening of the deficit.
But Germany, guardian of budgetary rigor within the EU, promises a “normalization of public finances” by 2024, according to the Ministry of Finance. The German economy is especially affected by the war in Ukraine and its consequences in terms of energy, which weigh on its industrial sector and weigh on the purchasing power of households. Recession threatens next year: the government expects a 0.4% drop in GDP in the euro zone’s largest economy.
Fund of 200 billion euros
Therefore, Berlin launched a giant €200 billion special fund to lock in energy prices, to be used in 2023 and 2024. And the government presented a 2023 budget in November containing €45.6 billion of new debts. , compared to only 17.2 billion euros estimated last June. . However, this budget will be the first in three years to officially respect the debt brake rule, which prohibits the State from borrowing more than 0.35% of its GDP each year.
This obligation, a true totem for the liberal minister Christian Lindner, had been lifted from 2020 to 2022 to deal with the coronavirus pandemic that forced Germany to break the rigorous lockdown. But to return to this rule, the government has resorted to a true juggling act, by not counting special funds, such as the 200,000 million euro energy package, in the official budget.
The German Finance Minister is one of the most reluctant to the relaxation of European budgetary rules that the Twenty-seven are currently negotiating. The Maastricht Treaty establishes for Member States a general government deficit limited to 3% of national GDP and a public debt limited to 60% of GDP. The crisis linked to the Covid-19 pandemic has shattered these regulations, which remain suspended until the end of 2023.
Source: BFM TV
