- Federal budget trends up to and including February 2019
- Trends in federal expenditure by function
- Trends in federal expenditure by economic category
- Trends in federal revenue
- Tax revenue in February 2019
- Borrowing and guarantees
- Calendar
Federal budget trends up to and including February 2019
|
|
Actual 2018 |
2019 target |
Actual1 February 2019 |
|---|---|---|---|
|
Expenditure (€bn)2 |
336.7 |
356.4 |
64.9 |
|
|
|
+3.2 |
| Revenue (€bn)3 |
347.6 |
350.6 |
42.6 |
|
|
|
-12.0 |
| Tax revenue (€bn) |
322.4 |
325.5 |
39.7 |
|
|
|
-11.8 |
|
Fiscal balance (€bn) |
10.9 |
-5.8 |
-22.3 |
|
Financing/use of surplus: |
-10.9 |
5.8 |
22.3 |
|
- |
- |
81.3 |
|
0.3 |
0.3 |
-0.1 |
|
-11.2 |
5.5 |
0.0 |
| Net borrowing5 (€bn) |
0.0 |
0.0 |
-58.8 |
| Any discrepancies in totals are due to rounding. | |||
| 1 As per accounts. | |||
|
2 With the exception of expenditure on the repayment of debt incurred on the credit market, allocations to reserves and expenditure made to cover a cash deficit. Excluding expenditure from internal offsetting. |
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|
3 With the exception of revenue from loans on the credit market, withdrawals from reserves, revenue from cash surpluses and seigniorage. Excluding revenue from internal offsetting. |
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|
4 Negative values denote accumulation of reserves. |
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| 5 (-) debt repayment; (+) borrowing | |||
| Source: Federal Ministry of Finance | |||
Revenue
Federal revenue for January and February 2019 totalled €42.6bn, down by 12% (€5.8bn) on the year. Tax revenue (including transfers of EU own resources to the EU) declined by 11.8% (€5.3bn), mainly due to the fact that the Federation transferred €4bn more in GNI-based resources to the EU than it did in the first two months of 2018.
Other revenue was 15% (€0.5bn) lower than in the same period last year. This can be attributed primarily to the “other administrative revenue” category, which saw a decline of €0.2bn.
Expenditure
Federal expenditure in January and February 2019 totalled €64.9bn, up by 3.2% (€2bn) on the year. Federal spending is separated into consumption and investment spending.
Consumption spending was 3.5% higher than in 2018, mainly due to increases in military procurement spending (up by 27.1%). In addition, ongoing grants for public administrations were roughly €800m higher than in the same period last year.
These ongoing grants include federal grants to reimburse the Länder for social spending on basic income support for older people and for people with reduced earning capacity. Last year, roughly half of the corresponding funds for the fourth quarter of 2017 were charged to the 2017 budget, while the other half were charged to the 2018 budget. Starting this year, however, Länder are no longer able to draw down the funds for the final quarter of a year across budget years – from now on, the entirety of these funds must be taken from the following year’s budget. This gives the Federation planning certainty over its four expected transfers to the Länder . The federal grants to reimburse the Länder for social spending on basic income support for older people and for people with reduced earning capacity in January and February of this year thus represent the drawdown for the entire fourth quarter of 2018.
Grants for other areas in January and February 2019 exceeded last year’s figure by roughly 5.5% (€2.1bn). Within this category, grants to companies were up by 16.4% on the year, while grants to social security funds were up by 3.3%. Interest expenditure saw a sharp year-on-year decline of 20.2%.
Investment spending was roughly €4.4bn, only slightly below the level recorded at the end of February 2018.
Fiscal balance
The federal budget recorded a deficit of €22.3bn for the January–February 2019 period.
Revenue and expenditure are subject to strong fluctuations over the course of the fiscal year and thus have an uneven effect on cash funds in individual months. Net borrowing also tends to fluctuate considerably over the course of the year. This means that the fiscal balance at this point in the year and the corresponding net borrowing figures are not reliable indicators of the end-of-year figures for the fiscal balance and net borrowing. This is especially true towards the start of the year.
Trends in federal expenditure by function
Trends in federal expenditure by economic category
Trends in federal revenue
Tax revenue in February 2019
Total tax revenue (excluding local authority taxes) was 1.6% lower in February 2019 than in the same month last year. Receipts from joint taxes were down by 0.9%, but trends for the individual taxes within this category differed. Revenue from wages tax and value added taxes increased, continuing the trend of previous months. The yield from non-assessed taxes on earnings posted strong year-on-year growth in February, while receipts from assessed income tax and corporation tax declined substantially. February revenue from the latter two tax categories is based on the results of assessments for years prior to 2018, meaning that the decline is a result of coincidental factors to do with the assessment cycle and is unrelated to the signs of economic slowdown that are currently being observed. Receipts from final withholding tax on interest and capital gains continued on a strong downwards path, an effect that was magnified by a high baseline. Revenue from taxes accruing solely to the Federation also recorded a marked year-on-year decline of 7.7%, primarily as a result of a shift in insurance tax and tobacco duty revenue from February to March, which is occurring for technical reasons. Taxes accruing to the Länder once again posted a substantial revenue increase of 13.6%.
EU own resources
Transfers of own resources to the EU, including customs duties, totalled approximately €6.4bn in February 2019, roughly €2.4bn more than in 2018. Transfers to the EU are based on the planned financial framework for 2019. The overall volume of the 2019 budget is higher than that of the 2018 budget. In addition, fluctuations occur over the course of the year based on the EU’s financing needs at any given time. February’s high transfers were primarily a result of expenditure on the European Agricultural Guarantee Fund (EAGF).
Distribution among the Federation, Länder and local authorities
The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder ) were down by 14.2% on the year in February 2019. This can be attributed to various factors. First, receipts from joint taxes as well as from taxes accruing solely to the Federation were down in February 2019. Second, the Federation’s share of value added taxes is lower than it was in February 2018, mainly as a result of changes in the distribution of VAT revenue in the fiscal equalisation system on the basis of legislation adopted in late 2018 to extend federal support for the Länder and local authorities to help them pay for refugee-related costs and adjust revenue distribution arrangements between the Federation and Länder following the financial closure of the German Unity Fund ( Gesetz zur fortgesetzten Beteiligung des Bundes an den Integrationskosten der Länder und Kommunen und zur Regelung der Folgen der Abfinanzierung des Fonds „Deutsche Einheit “). In addition, the Federation’s transfers of own resources to the EU were higher than in 2018. The Länder saw a 1.0% rise in tax revenue. Their tax receipts were boosted by the change in VAT revenue distribution mentioned above and by dynamic growth in revenue from taxes accruing to the Länder , which compensated for the decline in receipts from joint taxes. The local authorities’ take from joint taxes was down by 0.5% on the year.
Cumulative overview of the January–February 2019 period
Total tax receipts increased by 0.2% on the year in the January-February 2019 period. Revenue from joint taxes rose by 0.6% in year-on-year terms, while the yield from taxes accruing to the Länder was up by 12.8%. Receipts from taxes accruing solely to the Federation were 5.2% below last year’s level.
Joint taxes
Wages tax
Growth in wages tax revenue continued to be very strong in February 2019, with gross receipts increasing by 5.4% on the year. This reflected continuing employment growth and rising incomes in Germany. Child benefit payments – which are financed from wages tax receipts – increased by 3.2% on the year in February 2019. However, it should be noted here that the 2018 baseline was understated as a result of statistical problems. Payments of old-age pension allowance, which is also financed from wages tax revenue, declined from €130m in February 2018 to €89m in February 2019. On balance, cash receipts from wages tax increased by 5.6% on the year in February 2019 and by 6.1% on the year in cumulative terms over the first two months of 2019.
Corporation tax
February is a month when corporation tax revenue tends to be low. Negative receipts of -€32m were recorded for this tax in February 2019. In February last year, corporation tax receipts totalled €486m. Investment allowance payments are deducted from the gross receipts, although their impact is only marginal at this point. The resulting cash receipts from corporation tax stood at approximately -€33m in February 2019. On a cumulative basis, cash receipts from corporation tax fell by 76.6% on the year in January–February 2019.
Assessed income tax
February is a month when revenue from assessed income tax tends to be low. In February 2019, gross receipts from this tax were down by 37.7% on the year and stood at roughly €1.2bn. Once employee refunds, which were up this year, are subtracted from the gross figure, net cash receipts totalled €0.4bn, a year-on-year decline of 65.7%. In cumulative terms, cash receipts from assessed income tax were down by 31.4% on the year in the January–February 2019 period.
Non-assessed taxes on earnings
February 2019 saw a 20.1% year-on-year rise in gross receipts from non-assessed taxes on earnings. Taking into account a decline in refunds paid out by the Federal Central Tax Office, which are financed from this revenue, cash receipts from non-assessed taxes on earnings rose by 31.2%. Overall, the trend in revenue from non-assessed taxes on earnings tends to be very volatile over the course of the year. On a cumulative basis, cash receipts from this tax increased by 36.6% on the year in January–February 2019.
Final withholding tax on interest and capital gains
Revenue from final withholding tax on interest and capital gains fell by 63.0% on the year in February. This was partly due to an exceptionally high baseline figure from February 2018. In cumulative terms, cash receipts from withholding tax on interest and capital gains were down by 54.7% on the year in the January–February 2019 period.
Value added taxes (VAT)
Following a relatively poor result in January, revenue from value added taxes posted a marked increase of 3.3% on the year in February 2019. Receipts from domestic VAT rose by 2.5%, while import VAT revenue increased by 6.3%. The take from VAT tends to be very volatile over the course of any given year. Cumulative cash receipts from value added taxes were up by 2.3% on the year in the January–February 2019 period.
Taxes accruing to the Federation
In February 2019, revenue from taxes accruing solely to the Federation was 7.7% below last year’s level, with particularly marked declines in revenue from insurance tax (down by 9.5%) and tobacco duty (down by 14.9%). For technical reasons, a large amount (roughly €0.9bn) that should be recorded as February revenue will actually be posted in March’s results for these taxes. This means that the cash receipts are not apparent at this stage. Declines in revenue were also recorded for energy duty (down by 8.5%) and electricity duty (down by 2.7%). Solidarity surcharge brought in 5.0% less, reflecting the trend of its tax bases. Revenue gains were recorded for motor vehicle tax (up by 3.7%). Trends in revenue from other taxes had only a minor impact on the overall results for taxes accruing to the Federation.
Taxes accruing to the Länder
The yield from taxes accruing solely to the Länder was up by 13.6% on the year in February 2019. This was driven mainly by higher receipts from real property transfer tax (up by 12.8 %) and inheritance tax (up by 22.8 %). Revenue gains were also recorded for fire protection tax (up by 3.4%) and betting and lottery tax (up by 0.5%). Receipts from beer duty were down by 8.9% on the year.
Borrowing and guarantees
|
Authorised amount |
Amount allocated as of 31 December 2018 |
Amount allocated as of 31 December 2017 |
|
|
in €bn |
|||
| Export credit guarantees |
153.0 |
120.7 |
121.0 |
| Loans to foreign debtors, foreign direct investment, EIB loans |
65.0 |
42.7 |
44.3 |
| Financial cooperation projects |
28.5 |
22.8 |
19.6 |
| Food stockpiling |
0.7 |
0.0 |
0.0 |
| Domestic guarantees |
158.0 |
104.7 |
103.1 |
| International financial institutions |
66.0 |
60.1 |
60.1 |
| Treuhandanstalt successor organisations |
1.0 |
1.0 |
1.0 |
| Interest compensation guarantees |
15.0 |
15.0 |
15.0 |
Calendar
| Monthly report | Reporting period | Publication date |
|---|---|---|
|
April 2019 issue |
March 2019 |
23 April 2019 |
|
May 2019 issue |
April 2019 |
20 May 2019 |
|
June 2019 issue |
May 2019 |
20 June 2019 |
|
July 2019 issue |
June 2019 |
22 July 2019 |
|
August 2019 issue |
July 2019 |
22 August 2019 |
|
September 2019 issue |
August 2019 |
20 September 2019 |
|
October 2019 issue |
September 2019 |
21 October 2019 |
|
November 2019 issue |
October 2019 |
21 November 2019 |
|
December 2019 issue |
November 2019 |
20 December 2019 |
|
1 In accordance with the IMF’s Special Data Dissemination Standard Plus (SDDS Plus); see http://dsbb.imf.org Source: Federal Ministry of Finance |
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|
5–6 April 2019 |
Eurogroup und informal ECOFIN Council meetings in Bucharest |
|
11–12 April 2019 |
Meeting of G20 finance ministers and central bank governors in Washington, D.C. |
|
12–14 April 2019 |
Spring Meetings of the IMF and World Bank in Washington, D.C. |
|
16–17 May 2019 |
Eurogroup and ECOFIN Council meetings in Brussels |
|
8–9 June 2019 |
Meeting of G20 finance ministers and central bank governors in Fukuoka, Japan |
|
13–14 June 2019 |
Eurogroup and ECOFIN Council meetings in Luxembourg |
|
28 June 2019 |
G20 summit in Osaka, Japan |
| Click here for the full schedule (only in German) | |
