General government debt in Germany increased by €62 billion in 2023 to €2.62 trillion. The basis for this calculation is government debt as defined in the Maastricht Treaty, which is harmonised across the European Union. The increase was similar to that of the previous year, but significantly weaker than in the years before. Central government debt grew by €75 billion, while state government debt continued to fall.

The debt ratio, meaning the ratio of debt to nominal gross domestic product (GDP), fell for the second year in a row, to 63.7%. The significant decline of 2.4 percentage points is due to strong growth in nominal GDP. GDP rose by 6.3%, mainly owing to high inflation. Taken by itself, this reduced the debt ratio by 4 percentage points.

The increase in debt was lower than the general government (Maastricht) deficit of €87 billion. Part of the deficit was financed not by new debt, but by drawing on available bank deposits. The government had built up these reserves during the coronavirus pandemic by setting aside a portion of its large-scale borrowing. Debt had thus already risen in previous years without a deficit having to be financed. Furthermore, lower borrowing was possible due to the repayment of funds that had previously been lent by the government to support energy supply companies and in the form of assistance loans during the coronavirus pandemic. However, loan repayments do not reduce the national accounts deficit.

The liabilities of government-owned “bad banks”, which are included in the debt, and loans from aid measures for euro area countries declined. Bad banks further reduced their debt by just under €17 billion. Government support measures in favour of domestic financial institutions had contributed €128 billion to the debt level as at the end of 2023, accounting for 3.1 percentage points of the debt ratio. Assistance measures for euro area countries fell slightly to just over €83 billion (2.0 percentage points of the debt ratio).

In addition to national debt, EU Member States are increasingly taking on debt together at the European level. Germany is estimated to account for a share of €60 billion, or 1.5% of GDP. Eurostat recently published both the Maastricht debt of the EU institutions and bodies and the Maastricht debt of the EU institutions and bodies after consolidation of assets against Member States for the first time. The consolidated debt is adjusted to the extent that EU debt is offset by claims of the EU on Member States. The consolidated debt stems, in particular, from the debt-financed grants of the EU off-budget entity Next Generation EU, which commenced operations in 2021. It stood at €148 billion in 2022 (2021: €73 billion) and is estimated to have risen to €240 billion in 2023. Ultimately, consolidated debt is largely repaid through the EU budget, and Member States are therefore involved in financing it through their financial contribution to the EU budget. Germany’s financial contribution currently amounts to around 25% of the budget.

Background: The EU Member States report data on their general government fiscal balance and debt to the European Commission each year at the end of March and end of September in what are known as EDP notifications. The Bundesbank calculates Maastricht debt, the definition of which is harmonised across the European Union. Germany’s Maastricht debt is largely based on the “debt of the general government budget”, which is calculated using national government finance statistics methodology. The Federal Statistical Office published its figures for this on 27 March 2024. Maastricht debt is generally higher (by €178 billion in 2023), as it is defined more broadly in methodological terms.