The Cabinet has adopted the updated version of the German stability programme, which will now be submitted to the European Commission and the Ecofin Council.

The national budget, i.e. the federal, state and municipal budgets along with the statutory social insurance scheme, is balanced for the second year in a row (2012 and 2013).

Continuing with consolidation

In the years to come, the German government also expects a balanced national budget, on the basis of the forecast submitted with the stability programme.

To this end the federal government is making a major contribution: this year the federal government has produced a structurally balanced budget. For the post-2015 period, the German government will manage without net new borrowing. The government will thus rigorously continue its consolidation course.

The euro states are obliged, under the terms of the European Stability and Growth Pact, to submit updated stability programmes at yearly intervals. In the programmes, the states present their financial-policy direction and report on compliance with the stability criteria.

Germany’s current stability programme lays out the overall economic situation of the country and provides and looks at expected trends between now and 2018. It also explains the most important financial-policy measures of the German government over the reporting period and presents voluntary financial-policy commitments within the scope of the German action programme on the Euro Plus Pact.

Significant decline in debt ratio

As was the case one year earlier, the Maastricht deficit is expected to be zero per cent of the country’s gross domestic product (GDP). Germany will thus continue to be well below the 3 per cent limit set in the Maastricht Treaty.
The debt ratio (government debt to GDP) dropped by 2.6 percentage points in 2013 as compared to the 2012 figure to 78.4 per cent of GDP. It is currently forecast to drop to 65 per cent by 2018.
This would mean that the German government would achieve its target of reducing the debt/GDP ratio to below 70 per cent by the end of 2017. This positive trend also lays the foundation for reducing the debt to less than 60 per cent of GDP within ten years. Germany aims to reduce the ratio significantly faster than required by European regulations, which provide for a reduction to the Maastricht limit of 60 per cent within 20 years.

Favourable conditions for long-term growth

Germany will comply in full with all national and European financial-policy criteria – in some cases with a lot of room to spare. Germany will continue its pro-growth consolidation course and lay the important foundations for effective governance and long-term growth with sound public finances. In this way Germany also accepts its responsibility for financial stability in Europe.