German general government debt up in 2020 by €275 billion to €2.33 trillion, debt ratio up from 59.7% to 70%
In the year the coronavirus pandemic began, general government debt in Germany as defined in the Maastricht Treaty was up by €275 billion to €2.332 trillion. By contrast, debt had been repaid in preceding years on the whole.
The debt ratio, meaning the ratio of debt to nominal gross domestic product (GDP), rose by 10.3 percentage points to 70%, which is the sharpest increase in the debt ratio within the space of a year since German reunification. Just one year previously, Germany’s debt ratio, at 59.7%, had dropped below the Maastricht Treaty’s reference value of 60% for the first time since 2002. By way of comparison, during the economic and financial crisis, the debt ratio increased by 16.8 percentage points in 2009 and 2010 combined and reached an all-time high of 82.5% – due in part to the assumption of extensive risk assets from the banking sector.
Just over half of the rise in government debt can be traced back to the deficits of central, state and local government and social security funds, totalling €140 billion, while general government used the other half to accumulate financial assets. This primarily involved general government topping up its deposits significantly, by €81 billion in net terms. In addition, government financial assets increased by €36 billion as a result of government-guaranteed assistance loans, which are refinanced in large part by the Economic Stabilisation Fund, and government stakes in individual firms. Tax deferrals gave rise to further receivables on a smaller scale. Overall, three-quarters of the rise in government debt was attributable to central government, which mainly bore the costs of the pandemic.
The government-owned “bad banks” marginally reduced their debt. Support measures in favour of domestic financial institutions added €184 billion to the debt level and 5.5 percentage points to the debt ratio at the end of 2020. Assistance measures for euro area countries accounted for €87 billion (2.6 percentage points).
Debt level (€ billion)
% of GDP
The EU Member States report data on the general government fiscal balance and on debt to the European Commission each year at the end of March and end of September – known as the SGP compliance report. To this end, the Federal Statistical Office calculates the balance and the Bundesbank the debt level.