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21 December 2023

Overview of federal budgetary and financial data up to and including November 2023

Translated extracts from the Federal Ministry of Finance’s December 2023 monthly report

Federal budget trends up to and including November 2023

Table: Trends in the federal budget

Expenditure (€bn)³

480.7

461.2412.6

Year-on-year change in % (year to date)

 

 -3.2

Revenue (€bn)⁴

364.7

389.7332.4

Year-on-year change in % (year to date)

 

 +6.8

Tax revenue (€bn)

337.2

356.3306.7

Year-on-year change in % (year to date)

 

 +6.2

Balance of pass-through funds (€bn)

0.0

0.00.0

Fiscal balance (€bn)

-116.0

- 71.5- 80.2

Financing/use of surplus:

116.0

71.580.2

Cash resources (€bn)

-

-172.8

Seigniorage (€bn)

0.1

0.20.2

Movements in reserves⁵ (€bn)

0.5

43.80.0

Net borrowing⁶ (€bn)

115.4

27.4- 92.8

Any discrepancies in totals are due to rounding.
¹ Including supplementary budget in accordance with the German Bundestag’s decision of 15 December 2023.
² As per accounts.
³ With the exception of expenditure on the repayment of debt incurred on the credit market, allocations to reserves and expenditure made to cover a cash deficit. Excluding expenditure from internal offsetting.
⁴ With the exception of revenue from loans on the credit market, withdrawals from reserves, revenue from cash surpluses and seigniorage. Excluding revenue from internal offsetting.
⁵ Negative values denote accumulation of reserves.
⁶ (-) debt repayment; (+) borrowing
Source: Federal Ministry of Finance

Actual 2022

2023 target¹

Actual²
January–November 2023

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2023 supplementary budget

The German Bundestag adopted legislation on 15 December 2023 to enact a supplementary budget for 2023. The 2023 supplementary budget represents a first step in implementing the consequences of the Federal Constitutional Court’s judgment of 15 November 2023, which declared the Second Supplementary Budget Act 2021 (Zweite Nachtragshaushaltgesetz 2021) to be void. The judgment affects the Climate and Transformation Fund directly. Other special funds are also affected indirectly, if the reasoning in the judgment is also applied to them. The 2023 supplementary budget will remedy the effects of the Second Supplementary Budget Act 2021 being rendered void and will put the funds still being used in 2023 to respond to crises on a sound legal basis. This applies in particular to financing the gas and electricity price brakes via the Economic Stabilisation Fund (Energy) and supporting those affected by the catastrophic floods in 2021, particularly in the Ahr Valley. The additional borrowing required in 2023 to finance Economic Stabilisation Fund (Energy) measures and for an allocation to the special fund for reconstruction aid (Aufbauhilfe 2021) exceeds the upper limit for new borrowing under the debt rule. The German Bundestag therefore declared an unusual emergency situation for 2023 that is beyond governmental control and has a major adverse impact on public finances. The amount by which the debt brake ceiling is exceeded on the basis of this decision must be repaid in accordance with an amortisation plan adopted by the Bundestag.

The supplementary budget’s 2023 targets for the core budget include spending of €461.2bn and revenues of €389.7bn. Hence, the difference between revenue and expenditure results in a fiscal balance of -€71.5bn in 2023. If seigniorage (€0.2bn) and revenue from reserves (€43.8bn) are added to the above revenue, then revenues total €433.8bn. Less the budgeted expenditure, net borrowing of around €27.4bn is required to cover the remaining deficit. (See also the table “Federal budget trends”)

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Revenue

Federal revenue (excluding seigniorage, withdrawal from reserves and revenue from loans) totalled approximately €332.4bn for the period from January to November 2023, up by 6.8% (€21.1bn) on the year. Tax revenue totalled €306.7bn, a gain of 6.2% (€17.9bn) on the year. Further information on tax revenues is provided in the article “Tax revenues and economic environment in November 2023” (in German only) in the current edition of the monthly report.

The category of “other income” recorded an increase of 14.0% (€3.1bn) on the year in the January–November period. Within this category, interest revenue from the Federation’s cash management system was up by €1.4bn, while income from guarantees increased by €1.0bn on the year. In addition, Germany received €0.6bn in disaster relief from the EU Solidarity Fund to help repair the damage caused by the severe floods in summer 2021.

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Expenditure

In the period from January to November 2023, federal expenditure totalled €412.6bn, down by 3.2% (€13.5bn) on the year. Broken down by economic category, investment spending was up by 23.7% (€8.0bn), while consumption spending was down by 5.5% (€21.5bn) on the year.

The significant rise in investment spending can still be attributed to the €6.3bn loan that was granted to the IMF’s Resilience and Sustainability Trust in January 2023. Even after adjusting for this special effect, however, investment spending was up on the year (by 5.1%, or €1.7bn). A closer look at the figures shows contrasting trends: On the one hand, liquidity assistance provided to the Federal Employment Agency declined by €1.3bn on the year in the first 11 months of 2023. In addition, liquidity assistance totalling €1.0bn was disbursed to the long-term care insurance compensation fund in the first ten months of 2022, and this year’s loan to the Poverty Reduction and Growth Trust is €0.7bn less than in 2022. On the other hand, however, “investment grants to other areas” increased by €2.7bn on the year. These grants are distributed among a wide variety of federal budget items: key areas included grants for investments in Autobahn des Bundes GmbH (up by €0.9bn), grants for the operation of floating LNG terminals (up by €0.8bn), and grants to promote ventilation and air conditioning systems that minimise the spread of infection (up by €0.4bn). In addition, a €1.0bn loan extending beyond the current year was granted to the health fund in August 2023. Fixed asset investment remained basically unchanged year-on-year.

Consumption spending also showed contrasting trends. Due to the general increase in interest rates, interest expenditure rose sharply, by €22.3bn, while ongoing grants and subsidies declined by 15.3% (€46.7bn) on the year, mainly because much less funding had to be made available to combat the adverse effects of the Covid-19 pandemic than in 2022. For example, federal payments to the health fund to cover pandemic-related costs totalled €1.5bn, a decline of €28.0bn on the year. Pandemic-related assistance to businesses totalled €0.5bn, down by €10.7bn on the year. Grants for the centralised procurement of vaccines to fight SARS-CoV-2 fell by €5.4bn on the year, to €1.0bn. Pandemic-related compensation payments under section 21 of the Hospital Financing Act (Krankenhausfinanzierungsgesetz) were down by €4.1bn on the year in the first eleven months of 2023. In addition, €5.9bn in federal budget funds were allocated to the Climate and Transformation Fund in 2022, and no such allocation is being made in 2023. The decline in ongoing grants and subsidies was offset somewhat by increases in spending on citizen’s benefit (up by €3.3bn) and government housing and heating allowances (up by €1.7bn). Federal subsidies to the general pension insurance system and the supplementary federal subsidy to the health fund each rose by €1.8bn. In addition, spending on efforts to enhance security, defence and stability in partner countries was up by €2.5bn, mainly in connection with the war in Ukraine.

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Fiscal balance

The federal budget recorded a deficit of €80.2bn for the January–November 2023 period.

Revenue and expenditure are subject to strong fluctuations over the course of the fiscal year and thus have an uneven effect on cash funds in individual months. Net borrowing also tends to fluctuate considerably over the course of the year. This means that the fiscal balance at any given point in the year and the corresponding net borrowing figures are not reliable indicators of the end-of-year figures for the fiscal balance and net borrowing.

Trends in federal expenditure by function

Tabelle vergrößern

Trends in federal expenditure by economic category

Tabelle vergrößern

Trends in federal revenue

Tabelle vergrößern

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Tax revenue in November 2023

2023 trends in tax revenue (excluding local authority taxes)

Tabelle vergrößern

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Tax revenue trends

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Total tax revenue

Overall tax revenue (excluding local authority taxes) was nearly at the same level as last year (see the table “2023 trends in tax revenue (excluding local authority taxes)”). The same applies to joint taxes, which generate most tax revenue. Revenue from wages tax, corporation tax and assessed income tax was down on the year, as was already the case in the previous month. This was balanced out by a rise in revenue from final withholding tax on interest and capital gains in particular, as well as a moderate increase in receipts from value added tax and non-assessed taxes on earnings (see further details on the individual taxes below).

Revenue from taxes accruing to the Federation was up by about 6½% on the year. Energy duty posted revenue gains of over 6% on the year, which was probably still an indirect consequence of the temporary cut in rates of energy duty on fuels last summer, which lowered the baseline figures (see below). Other higher-revenue federal taxes that recorded gains include insurance tax, tobacco duty, electricity duty and the solidarity surcharge. Motor vehicle tax was the only federal tax whose revenue stagnated.

Revenue from taxes accruing to the Länder was down by approximately 11% on the year. Revenues from real property transfer tax rose again slightly compared to previous months, but still posted a significant year-on-year decline of approximately 17%. Revenue from inheritance tax, the other high-yielding Länder tax, also posted a decline, albeit a moderate one of about 3%.

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Apportionment of tax revenue among the different levels of government

The Federation’s take from joint taxes was up slightly, by almost 1%, despite receipts from joint taxes stagnating overall. This gain was due to the fact that the Federation’s share of VAT revenue increased on the year. Accordingly, the Länder saw a slight decline in their take from joint taxes, of almost 1%. The changes in the apportionment of VAT revenue are based on the fact that, as stipulated in the Fiscal Equalisation Act (Finanzausgleichsgesetz), the fixed payments transferred to the Länder from the Federation’s share of VAT revenue have declined since 2022 (for details on the current distribution, see the table “Apportionment of VAT revenue in November 2023”). The Act Introducing Long-term Block Grants for the Länder in Connection with Refugee Flows and Amending the Wall Site Act (Gesetz zur Einführung einer langfristigen Pauschalentlastung der Länder im Zusammenhang mit Fluchtmigration und zur Änderung des Mauergrundstücksgesetzes) resulted in the Länder receiving an additional €3.9bn in fixed payments from the Federation in 2023. However, since the changes are only being implemented in December, these figures are not yet reflected in the revenue trend. Federal subsidies for public transport and supplementary federal grants to the Länder recorded a year-on-year increase of more than 10% respectively in November 2023. In contrast, transfers of own resources to the EU – which are financed from the Federation’s tax revenues – declined slightly on the year. Taking into account the increase in receipts from federal taxes, the Federation’s overall tax receipts (after the apportionment of VAT revenue and the subtraction of supplementary federal grants) climbed by about 2½% on the year in November. The Länder posted a decline in revenues of nearly 1%. Local authorities’ take from joint taxes was down only slightly on the year.

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Apportionment of VAT revenue in November 2023

In November 2023, revenue from value added taxes was distributed as follows among the Federation, Länder and local authorities:

Share of total VAT revenue (€25,787m) as per section 1 of the Fiscal Equalisation Act (Finanzausgleichsgesetz)

52.81398351%

45.19007254%

1.99594395%

€13,619m

€11,653m

€515m

Plus (+) / minus (-):

1/12 of the fixed payments as per section 1 (2) and (2a) of the Fiscal Equalisation Act (€9,659m)

-€805m

+€605m

+€200m

1/5 of the fixed payment as per section 1 (5) of the Fiscal Equalisation Act (€1,884m)

-€377m

+€377m

 

Share after accounting for the fixed payments

48.23%

49.00%

2.77%

€12,438m

€12,635m

€715m

Any discrepancies in totals are due to rounding.

Federation

Länder

Local authorities

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Further details on specific taxes

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Wages tax

Gross revenue from wages tax was up by about 1½% on the year in November 2023. The tax relief measures contained in the Inflation Compensation Act (Inflationsausgleichsgesetz) continue to have a dampening effect on tax receipts in year-on-year terms.

The previous positive impact from the labour market on wages tax revenue has now abated as a result of the economic slowdown. Employment levels are currently still about ½% higher than in November 2022. The year-on-year growth rate has dropped over the course of the year. The level of short-time work has hardly changed in year-on-year terms, hence there has been no significant impact on wages tax revenue in November (see also the spotlight article in the German edition of the monthly report on the effects of the uptake of short-time work on tax receipts). On the other hand, it can be assumed that wages and salary increases, partly as a result of negotiated wage agreements, will continue to expand the tax base for wages tax, even though a significant part of current tax base growth can be attributed to the inflation compensation bonus, which is tax-exempt. This partly explains the relatively weak growth in gross revenue from wages tax.

In addition, child benefit payments (which are financed from gross wages tax receipts) continue to be markedly higher, at about 14%, than in the same period last year due to the increase in the monthly child benefit payments. On balance, cash receipts from wages tax declined by approximately 1½% on the year in November 2023.

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Taxes on earnings

In November, revenue figures for corporation tax and assessed income tax were driven by the revenue administration’s assessment activities for the years up to and including 2022. Revenues from these taxes can fluctuate significantly in year-on-year terms. Gross corporation tax receipts fell to a negative figure of about -€500m in November 2023, compared to +€150m in November 2023. This is due to the fact that refunds for past periods exceeded the income from back payments and prepayment adjustments. Refunds as well as back payments were up significantly on the year. The research allowance which is financed from receipts from corporation tax amounted to about €60m, a significant increase on the year. Cash receipts from corporation tax totalled approximately -€570m in November.

As with corporation tax, assessed income tax refunds and back-payments for past periods were significantly higher than in 2022. Taking into account the prepayment adjustments and the research allowance, investment allowance and owner-occupied homes premium payments (all of which had a relatively small impact), cash receipts fell by almost €280m to about €290m on the year.

The strong year-on-year increase in tax revenue from final withholding tax on interest and capital gains continued in November with very strong growth of around 176%. The significant rise in interest rates is also likely to have a noticeable impact on tax revenue. Cash revenue from non-assessed taxes on earnings recorded only a slight year-on-year gain. However, November is a low-revenue month for this tax, so it has only a marginal impact on the annual result.

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Value added taxes

Revenue from value added taxes was up by 3% on the year in November 2023, and therefore continues to lag slightly behind the growth rate of consumer prices in previous months. This is probably also a reflection of the continuing weak trend in consumption (see above). VAT revenue growth rates above the rate of inflation can be expected again only once real consumption picks up again. A nuanced analysis of the VAT components (see the spotlight article in the German edition of the September 2023 edition of the monthly report) shows that receipts from import VAT were down even more markedly than in previous months, by almost 25%. The trend in import VAT revenue is generally determined by the volume of goods being imported, which recently fell by about 16% on the year. By contrast, receipts from (domestic) VAT rose by nearly 16½ %. One factor here is that a decline in import VAT revenue also leads to a decline in deductions of input VAT, which results in less of a drop in VAT revenue overall.

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Energy duty

In the case of energy duty, it generally takes two months for accrued revenue to show up in cash statistics. Revenue from energy duty therefore recorded a substantial drop, particularly in the August–October 2022 period, due to the temporary cut in energy duty rates in the June–August 2022 period. Receipts were still affected in November 2022 due to the change in consumer behaviour resulting from the impact of the rate cut on prices. There was a higher demand for fuels during the months when tax rates were reduced, and less of a demand in the months immediately before and after the reduction. Since receipts in November 2022 can be attributed to consumption in September 2022, the month immediately after the end of the temporary reduction, the 2022 baseline figure is likely to have still been quite low. This contributed to a relatively sharp increase in VAT receipts, which were up by 6% on the year in November 2023.

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Borrowing and guarantees

Borrowing trends for the Federation in November 2023

Tabelle vergrößern

Borrowing trends for the Federation (budget and special funds, excluding loan financing) in November 2023

Tabelle vergrößern

Guarantees

  

Authorised amount

Amount allocated as of
30 September 2023

Amount allocated as of
30 September 2022

in €bn

Export credit guarantees

150.0

114.6

121.6

Loans to foreign debtors, foreign direct investment, EIB loans

60.0

39.9

36.2

Financial cooperation projects

38.8

33.9

30.7

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

650.0

347.7

302.7

International financial institutions

85.0

75.5

75.5

Treuhandanstalt successor organisations

1.0

1.0

1.0

Interest compensation guarantees

15.0

15.0

15.0

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Calendar

Publication schedule¹ of the monthly reports and fiscal data

January 2024 issue

December 2023

30 January 2024

February 2024 issue

January 2024

22 February 2024

March 2024 issue

February 2024

21 March 2024

April 2024 issue

March 2024

23 April 2024

May 2024 issue

April 2024

24 May 2024

June 2024 issue

May 2024

20 June 2023

July 2024 issue

June 2024

23 July 2024

August 2024 issue

July 2024

22 August 2024

September 2024 issue

August 2024

20 September 2024

October 2024 issue

September 2024

22 October 2024

November 2024 issue

October 2024

21 November 2024

December 2024 issue

November 2024

20 December 2024

¹ In accordance with the IMF’s Special Data Dissemination Standard Plus (SDDS Plus); see http://dsbb.imf.org

Source: Federal Ministry of Finance

Monthly report

Reporting period

Publication date

Key dates on the fiscal and economic policy agenda

15–16 January 2024 

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

22–24 February 2024 

Eurogroup and informal ECOFIN Council meetings in Gent, Belgium

28–29 February 2024 

Meeting of G20 finance ministers and central bank governors in Sao Paolo, Brazil

11–12 March 2024 

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

11–12 April 2024

Eurogroup and ECOFIN Council meetings in Luxembourg

18–21 April 2024

Spring meetings of the International Monetary Fund and the World Bank Group with meeting of G20 finance ministers and central bank governors in Washington, D.C.