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German deficit shrinks as economy picks up

29 February 2012 No Comment

Germany’s budget deficit dropped sharply to 1 per cent of gross domestic product last year – putting Europe’s biggest economy well under the permitted limit for countries that use the euro.

The Federal Statistical Office on Friday confirmed an initial deficit estimate it gave in early January.

Last year’s low deficit followed two years in which Germany exceeded the 3 per cent stipulated by European Union rules – a limit frequently flouted by countries in the 17-nation euro zone.
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Germany had a surplus of 0.2 percent in 2007 but went back into the red following the 2008 financial crisis.

The deficit was 3.2 per cent in 2009 and rose to 4.3 percent in 2010. Two years of strong economic growth have boosted tax revenues, strengthening Germany’s public finances.

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