National debt is rising: German deficit grows sharply in the first half of the year

Fuel discounts, tax relief and rising interest rates: the German state spends significantly more than it takes in. One item in particular drives up the minus.

Berlin. The public budget deficit in Germany increased significantly in the first half of the year due to fuel discounts and higher interest expenses. It totaled 98.8 billion euros, as the Federal Statistical Office announced on Friday regarding the cash statistics.

In the same period last year, the loss was significantly smaller at 58.5 billion euros. The increase is due to the fact that federal, state, local and social security spending rose significantly more at around six percent than income at around two percent. All levels of government ended the first half of the year with a deficit.

The federal government had by far the largest share of the overall deficit, with its financing gap more than doubling to 72.3 billion euros. On the revenue side, the government's relief measures such as the reduction in electricity tax for industry and agriculture as well as the so-called fuel discount in May and June had an impact. Federal tax revenue therefore fell by 3.1 percent.

Interest expenses in particular have risen sharply

At the same time, expenses rose sharply, partly due to significantly higher interest costs. For the general public budget, interest expenses climbed by more than a fifth to 31.2 billion euros compared to the same period last year. Investors are demanding significantly higher returns for buying federal bonds - among other things because of increased inflation and competition from attractive corporate bonds, for example to finance data centers for artificial intelligence.

The municipalities were also deeply in the red. At 20.1 billion euros, their financing deficit remained at the record level of the previous year, the highest value for the first half of the year since reunification. The states together recorded a loss of 6.3 billion euros, with individual federal states such as Bavaria and Saxony achieving surpluses.

Social security ended up almost balanced. This was also successful because it was supported by federal loans totaling 10.2 billion euros.