- Scholz Administration Faces Budget Debate Amid Declining Deficit and Slight GDP Drop
August 27 2024 06:04:37 UTC– As the Scholz administration grapples with internal disputes over financial planning within the SPD-Green-FDP coalition in Berlin, Germany’s state deficit has decreased to €38.1 billion in the first half of 2024, according to preliminary calculations by the Federal Statistical Office (Destatis).
This represents a €1.3 billion reduction compared to the same period in 2023. The deficit, as a share of the Gross Domestic Product (GDP) at current prices, stood at 1.8%.
Amid these budgetary discussions, Germany’s GDP contracted by 0.1% in the second quarter of 2024 compared to the first quarter, when adjusted for price, seasonal, and calendar effects. This downturn confirms the preliminary estimate released on July 30, 2024. “After a slight increase in the previous quarter, the German economy cooled off again in the spring,” said Ruth Brand, President of the Federal Statistical Office. The GDP had seen a 0.2% rise in the first quarter of 2024.
The ongoing financial planning debate within the coalition underscores the broader economic challenges faced by the Scholz administration, as it seeks to balance fiscal responsibility with the need for economic stability.