German public debt hits new high
Germany’s total public debt reached €2.37 trillion (about $2.6 trillion) at the end of 2022 – a new record – the Federal Statistical Office (Destatis) announced on Wednesday.
The debt level corresponded to an increase of 2% – or €46.1 billion – compared to the end of 2021, when the coronavirus pandemic was still in full swing.
According to Destatis, the national public debt reached the equivalent of €28,155 per person in Germany.
Federal debt increased by 4.6%, or €71.9 billion, to a total of €1.62 trillion.
“This is mainly due to continued high financing needs in light of the pandemic in recent years and the current energy crisis,” the statistics agency said.
The rate of increase was also reduced in 2022 compared to 2021 and 2020 amid more pronounced COVID-related disruptions.
The increase in Germany’s interest obligations
Total public debt is made up of loans at various levels: federal, state and municipal.
Although federal and municipal debt levels increased by the end of 2022, all but one of Germany’s 16 states reduced their debt obligations by a total of 5% – €31.7 billion. Only the eastern state of Saxony-Anhalt recorded more debt.
Although public debt has little in common with private household debt, rising debt can cause problems due to rising interest payments.
“The debt burden means higher interest payments taking up an ever-increasing share of the annual budget, meaning money is lacking for significant spending or investment,” ING bank chief economist Carsten Brzeski told Reuters.
Where does the increase in debt come from?
Much of the increase in borrowing in recent years has gone to fill a special coronavirus fund, which was extended to act as an energy fund when the energy crisis hit following Russia’s invasion of Ukraine.
The coronavirus special fund totaled debts of €52.4 billion by the end of 2022, while the energy fund’s debts exceeded €30 million for the first time.
Source: DW
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