RWI Konjunkturberichte

Germany's public finances have significantly improved in the recent years, as the economic and financial conditions were extremely favorable. Provided there is no change in fiscal policy, further sizeable structural surpluses are to be expected in the coming years. However, the current favorable financial position of the state is not just a result of structural improvements. The good position is partly owed to the positive economic developments and partly owed to the historically low interest rate level as the development of the structural primary balances shows. Therefore it would not be wise to trust in a permanent continuation of the favorable economic and financial conditions that currently still prevail. It is recommended that the reduction of the debt ratio should remain of the high priority in the coming legislative period; at least the cyclical surpluses should be used to reduce government debt. At the same time, the remaining budgetary leeway should be used in order to counter a further increase of the tax and social contributions ratio. In order to finance higher government investments, the qualitative consolidation of the public finances should be further promoted.

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