German state coffers are bulging with cash as councils and social security logged their biggest surpluses in more than a decade. The achievement is doubtful, however, as it came at the expense of investment and growth.
Germany's statistics office, Destatis, reported Monday, that Europe's biggest economy posted a budget surplus of 16.1 billion euros ($21.1 billion) in the fist half of 2014.
Destatis data showed that the federal government alone accumulated a surplus of 4 billion euros in the first six months of the year - the first time it has not registered a deficit in the period since 1991.
The overall surplus, which also includes the budgets of regional and local governments as well as the social security system, amounted to 1.1 percent of the country's gross domestic product (GDP).
First half figures for 2014 put Germany on track of a third consecutive budget surplus for the full year, following surpluses of 0.3 percent and 0.1 percent in 2013 and 2012 respectively.
Destatis attributed Germany's brilliant finances to stable income tax revenue as a result of a robust jobs market. In addition, the German central bank, the Bundesbank, logged a profit that was 4 billion euros higher than in the same period last year, thus boosting state income.
These figures stand in stark contrast to slumping growth in the second quarter. Following economic expansion of 0.7 percent in the first three months of this year, GDP shrank by 0.2 percent between April and June, Destatis also said Monday.
Both a rising budget surplus and falling growth suggest that the German government might not be doing enough to stimulate the economy. Therefore, Berlin is likely to face renewed calls for higher public expenditure to boost domestic growth and subsequently help the faltering recoveries in other eurozone countries.
France and Italy have already urged Germany to cut taxes and bolster weak public spending. And European Central Bank President Mario Draghi suggested in a speech last month that some governments could do more for growth in Europe.
uhe/ng (dpa, Reuters)