German gov't achieves record budget surplus in 2017

BERLIN - The German government has achieved another record budget surplus in 2017, figures published on Friday by the Federal Statistical Office showed.

According to the Wiesbaden-based government statisticians, federal-, state- and communal fiscal authorities took in 36.6 billion euros ($45 billion) more than they spent in 2017.

The figure marked the highest surplus measured since the beginning of current time-series from German reunification in 1990 onwards.

The Statistical Office explained that German fiscal authorities had hereby benefited from strong economic momentum which in turn led to rises in tax revenue and social insurance payments. Germany has now recorded a budget surplus for four years in a row.

Additionally, the ultra-loose monetary policy adopted by the European Central Bank (ECB) since 2015 continued to exert downward pressure on the interest rates paid by German federal-, state- and communal governments on their debts. Low yields on public bonds have offered fiscal authorities a welcome opportunity to restructure and shrink their financial liabilities.

The single-biggest cumulative budget surplus was achieved by state governments (16.2 billion euros), followed by the public social insurance scheme (10.5 billion euros) and communes (8.8 billion euros). By contrast, the federal government in Berlin netted a relatively-modest 1.1 billion euros.

Reacting to the news on Friday, the Association of German Chambers of Industry and Commerce (DIHK) urged policymakers to capitalize on the windfall as an opportunity to lower taxes on individuals and companies.

"The state does not exist to amass surpluses", DIHK president Eric Schweitzer told press.

Several employer-side lobbies, including DIHK, have vocally criticized the financial chapters of the recent coalition agreement between the Christian Democratic Union (CDU), Christian Social Union (CSU) and German Social Democrats (SPD) for what they perceive as an undue emphasis on redistributive measures and public investment, as opposed to tax cuts.

The Statistical Office estimates that gross domestic product (GDP) grew by 2.2 percent in 2017 and will remain on an expansionary trajectory to reach annual GDP growth of 2.4 percent in 2018.