Germany breaks records with its year end financial surplus

23 February 2017

eurozone The German economy ended the year with a healthy surplus of nearly €24 billion.

Not only was 2016 the third consecutive year in which government revenue was greater than spending, but the largest surplus since the country’s reunification in 1990.

"In absolute terms, this was the highest surplus achieved by general government since German reunification," the German federal statistics agency said in a statement.

Germany benefitted from increased employment and more money paid in taxes, although it also had to spend more on housing and integrating refugees.

The statistics office said an increase in income and in property taxes accounted for the “considerable growth” in social contributions.

An estimated €7.7 billion of the surplus will, by law, will be given to a government fund to support refugees.

More money, according to Chancellor Angela Merkel, will now be devoted to defence, domestic security and social improvements.

Strong spending by German residents pushed the economy into 0.4% growth in the last quarter of 2016. At the same time, however, the statistical office said that foreign trade of goods and services rose by 3% over 2015, but imports increased by 4.5%.

On Wednesday the European Commission said that Germany’s surplus was too large.

It said that cutting that surplus would help the whole of the eurozone.

Comments

0 #5 dw 2017-02-26 19:03

Unfortunately the €24 billion surplus and the lack of any system for redistributing it within Europe is the reason why the EU is disintegrating.

0 #4 R 2017-02-26 00:18

In general poor productivity leads to low salaries. Portugal still has one of the lowest minimum wages of Europe. As the problems are structural many Portuguese people have voted with there feet and left the country. Of the total population 20% is living/working abroad. When compared to Spain is number is only 2,7%. Without facing the facts and (finally) making the necessary adjustments, nothing will change and Portugal continues to be a country with enormous, unrealized potential. Redistributing capital from Germany to sustain the status quo in Portugal is no good for anyone.

0 #3 R 2017-02-26 00:18

Not convinced? Instead of blaming others for being successful, let’s focus on what is wrong in Portugal. The list runs from under funded pension plans to structural budget deficits and poor productivity. In addition, what was meant to be a facilitating measure to help people with lower income and infrequent working hours, has been abused on a grand scale; the green receipt. The green receipt is also undermining the success of small companies as it offers the possibility to offer lower prices to the end consumer as no VAT is charged. The green receipt regime is for income up to 10.000 Euro per annum. In practice when a worker is getting close to the threshold, he/she will invoice without VAT in the name of a relative. That is the best case scenario. The alternative is that they ask the end consumer if it is o.k. to add 23% VAT….., which is an open invitation to cash payments without VAT. Solution: end the green receipt regime. People will then have to start working for a company (or start a company) as their customers still need the service. This leads to higher wages, better tax compliance and helps the government to balance their budget.

0 #2 R 2017-02-26 00:17

E.g. sound economical policies, balanced budgets and an end to corruption. This tends to be too much to ask from a country that in the past resorted to please the public and labor union while knowing the promises were not worth the paper it was written on.
This worked well for the elite while they had control over the Escudo and could print as much money as they wanted. On the other hand the Euro is a store of value. Good for people with savings and pensioners, however, inconvenient for a nation who has a history to resort to printing money to match obligations.

0 #1 R 2017-02-26 00:15

It is easy to blame Germany for being successful. Portugal has tremendous potential in the past, present and future. However Portugal has a track record of being mismanaged. Corruption and clientele from the past can not be quickly erased
and the new left wing coalition is again resorting to spending beyond there means. Unfortunately something’s will never change. So if Portugal wants
more contributions (that is in addition to the Euro 78 Billon bail out package to save the country from going bust) one would expect something in return.

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