German debt reaches all-time high
Germany’s public debt reached a new record of €2.37 trillion ($2.6 trillion) at the end of 2022, data released by the Federal Statistical Office (Destatis) on Wednesday showed.
The debt owed by the overall public budget to the non-public sector rose 2% year-on-year, or by €46.1 billion ($50 billion), compared to 2021. Destatis attributed the increase to emergency measures during the Covid-19 pandemic and the energy crisis.
Compared to the end of the third quarter of 2022, debt soared by 1.8% or €41.9 billion ($45.5 billion), raising concerns over its impact on the German economy and financial stability. Per-capita debt amounted to €28,155 ($30,600) representing a growing burden on the population.
Spiraling inflation, a raging energy crisis and expectations of a further slowdown in the EU’s largest economy have eroded consumer activity, posing a threat to economic prosperity.
Economists say that the surging debt owed to the non-public sector illustrates the challenging economic conditions faced by Germany due to the pandemic and the energy crunch. The non-public sector includes banks and other domestic and foreign economic sectors, such as private businesses in Germany and abroad, according to Destatis.
The government’s efforts to mitigate the impact of these crises have led to a significant increase in public borrowing. German Finance Minister Christian Lindner earlier said the government needed to limit its spending, meaning the state will not be able to quickly solve current economic problems such as falling levels of wealth.
Germany, which relies mainly on natural gas to power its industry, has been struggling to cope with skyrocketing energy costs. The nation has vowed to replace imports from its once biggest supplier – Russia – by as early as mid-2024. However, attempts to diversify gas supplies have contributed to the energy crunch.
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