Billions in government spending in the corona pandemic tore the German national budget deeper into the red in the first half of the year.

The federal government, states, municipalities and social security funds spent a total of 80.9 billion euros billion euros more than they received, as the Federal Statistical Office announced on Tuesday based on preliminary data.

In relation to total economic output, the deficit was 4.7 percent.

It was the second highest minus in the first half of the year since reunification.

In the first half of 2020, the deficit was 47.8 billion euros

Effects of the pandemic

In the corona crisis year 2020, the German state reported a deficit for the first time since 2011, both in the first six months and in the year as a whole.

After the pandemic began in March 2020, the state supported the economy with economic aid worth billions.

The federal and state governments have only recently decided to extend the economic aid (Bridging Aid III Plus) that has been running until the end of September and the facilitation of access to short-time working allowance.

In the first half of 2021, all levels of government showed a funding deficit.

According to the information, the expenditure for corona bridging aid, for compensation payments to hospitals, for vaccines and protective equipment as well as for short-time work benefits and child bonuses made a significant contribution to the increase in government spending.

According to the Deutsche Bundesbank, the deficit could increase for the year as a whole despite the expected strong economic growth.

It is likely to exceed 5 percent of GDP (previous year: 4.5 percent), wrote the central bank in its latest monthly report.

"The main reason for the increase, however, are measures that are not justified by the corona crisis - such as the partial abolition of the solidarity surcharge," it said.

Germany is not threatened with trouble from Brussels because of the deficit.

Because of the Corona crisis, the EU countries had for the first time suspended the rules of the Stability and Growth Pact, according to which the budget deficit must not exceed three percent and the total debt must not exceed 60 percent of the gross domestic product.

Consumption drives the economy

After the slump in the corona lockdown at the beginning of the year, the German economy picked up speed again in the second quarter.

The gross domestic product rose in the period from April to June by 1.6 percent compared to the previous quarter.

In a first estimate, the Wiesbaden authority assumed growth of 1.5 percent.

Compared to the fourth quarter of 2019, the quarter before the start of the Corona crisis, economic output was still 3.3 percent lower.

Above all, consumer spending after the end of the corona lockdown and government consumer spending boosted the economy. The restrictions to fight the corona virus had been gradually relaxed from May.

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