Destatis: General government deficit of EUR 42.8 billion in first half of 2010

Hence the deficit in the first half of 2010 was more than twice that of the first half of 2009 (EUR 18.7 billion). With some time lag, the impact of the economic and financial crisis and of the relevant government measures taken to support the economy and the financial markets is clearly reflected now in the budgets of the central, state and local government as well as the social security funds. Measured by the gross domestic product at current prices (EUR 1,211.7 billion), a deficit ratio of -3.5% was calculated from net borrowing for the first half of 2010.

Regarding general government revenue (EUR 526.1 billion) and expenditure (EUR 568.9 billion), the trend that started in the previous year continued. The decrease in revenue amounted to -1.5% and hence was about the same as in the relevant period a year earlier (-1.4%). General government expenditure continued to increase considerably by +3.0% (1st half of 2009: +3.6%), the growth being markedly slowed down by a special effect. In national accounts, the revenue obtained in the first half of 2010 from the auction of frequency ranges for wireless net access to telecommunication providers is recorded as "negative" expenditure. Not considering that one-time effect, general government expenditure was up 3.8%.

Tax revenue (the main source of general government revenues) amounted to EUR 278.0 billion in the first half of 2010 and hence decreased by 2.8% on a year earlier. More specifically, taxes on production and imports paid to general government (EUR 148.0 billion) were down by 2.7%, income and property tax (EUR 130.0 billion) by 2.9%. As regards taxes on production and imports, the development was mainly due to that of trade tax, whose volume (EUR 14.4 billion) was by about one fifth smaller (-18.9%) than a year earlier. That could not be offset by the rise in turnover tax (+0.2%) and of import taxes (+10.7%). Within income and property tax, a downward development was recorded especially for revenue from wage tax (EUR 85.9 billion, -3.6%), from assessed income tax (-2.8%) and from non-assessed taxes on earnings (-9.5%). A much better development was shown by revenue from corporation tax, which was up 14.4%. General government obtained much less revenue from property income, which was down to EUR 9.3 billion (-29.0%) mainly as a result of a considerable decrease in Bundesbank profits. General government sales (EUR 23.3 billion) and social contributions paid to general government (EUR 204.4 billion), however, rose 2.0% and 1.9%, respectively, from the first quarter of 2009.

Regarding expenditure, EUR 227.6 billion (+3.1%) were spent on social benefits other than social transfers in kind and EUR 101.3 billion (+4.9%) on social benefits in kind. High growth rates were also recorded for purchases for intermediate consumption (+3.8%) and compensation of employees (+3.5%). The increase in subsidies (+5.1%) is still mainly due to the Federal Employment Agency's reimbursement of social insurance contributions for short-time workers to enterprises. Interest paid by general government was up 3.3% and gross capital formation 3.0%. However, in the first half of 2010 lower expenditure was recorded for capital transfers (-10.9%).

On 19 July 2010, the Statistical Office of the European Communities (Eurostat) took a decision on the sector classification of the First Liquidation Agency (Erste Abwicklungsanstalt) in national accounts. The function of the First Liquidation Agency is to take risk positions and activities not strategically necessary from the WestLB--Landesbank and to liquidate them. According to the Eurostat (Statistical Office of the European Communities) decision, the First Liquidation Agency should be classified under the general government sector. The consequences of that decision have already been included in the figures for the first half of 2010. As a result, net borrowing of general government has deteriorated by some EUR 900 million. For reference year 2009, no changes have occurred in this context.