A huge budget surplus in Germany

Germany has a EUR 45 billion surplus after the first half of 2019. It is much more than experts or even the government estimates. The surplus is not surprising, however, Germany has been ending its financial year in the black for six years. But no one enjoys it.

While in Poland, with surprise and disbelief, we accept the plans of the government, which did not record the deficit in the budget law for the first time, Germany has just announced that after summing up the first six months of 2019, the budget surplus is 45,3 billion.

So Germany continues to manage the budget carefully, which they have been proud of for years. Exactly from 2014, when the budget surplus began to appear regularly. They had no deficit two years earlier, but at that time the budget was close to zero.

Source: Bankier.pl

Despite this, or maybe partly because of this, the economic situation of the German economy is not impressive. In the second quarter, real GDP dynamics was -0,1 percent. on a quarterly basis and 0 percent annual growth. The recession is already at the German door.

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Germany is fighting huge debts

So Germany is not in a perfect economic situation at all. Moreover, a budget surplus is even necessary in their case. They have to reduce the debt that has been built up over the years. In 2010, it was as high as 81,8 percent. GDP. The Treaty of Maastricht ordered a reduction to 60 percent, so Germany has been working for years to reduce the debt, which is now 60,9 percent. GDP. However, they are far from the record result of France, the authorities of which are not doing anything about economic indicators and this year they are approaching a debt of ... 100 percent. GDP.

German media: no success

"Handelsblatt", which is the flagship economic newspaper in Germany, there is no illusion that the data should not be a reason for optimism, because there is more of an accounting trick in them than indications of better times to come.

“The problem with the numbers is that this is a virtual account, not real money in the national coffers. In addition, the methods used for calculations are controversial. (...) One thing is certain, however: before the economic downturn, state finances are in good condition " - we read in "Handelsblatt".

Economists have no illusions that the German economy is on the verge of recession. That is why journalists write that it is worth considering relief for companies and increasing social assistance for the poorest. This would stimulate the economy more than, e.g., higher taxes. However, the authors of the text have no illusions that this will happen.

“Finance Minister Olaf Scholz, who is running for the chairmanship of the SPD, knows that by lowering taxes for legal persons he will not gain popularity among party comrades. It would be completely different if he asked to introduce a tax for the richest. On the other hand, the CDU / CSU does not have any tax policy plan apart from the drive to completely abolish the solidarity tax " - we read in "Handelsblatt".

The Sueddeutsche Zeitung, which has been considered a left-wing daily for years, appeals:

“The surplus is due to complex calculations, not a financial boom. It shows that the state takes more from citizens than it gives in the form of benefits. The state inhibits economic power. It saves. He has been doing this, by the way, since 2014. This is the wrong signal given the slowdown in the economy.

Investors also without delight

Disclosure of the data did not save the German index. The DAX is still in correction or - if you prefer - in the initial phase of the downtrend. Investors fear the coming recession, fueled by new information from the frontline of the trade war between the US and China. Germany is backfiring in it, because the Chinese have also introduced tariffs on the car sector, which is an important arm of the German economy.

DAX only occasionally approaches the resistance of 11834 points around and gradually bounces off this increasingly harder ceiling, unable to break it for a month. During today's session the German index is currently losing over -0,8%.

DAX 30 chart, D1 interval. Source: xNUMX XTB xStation