News of the week - German government budget ("Bundeshaushalt")
Last Wednesday, the German government (Bundesregierung) decided on the size and the division of their first budget. In the diagram, you can see how the budget of 261,7 Billion Euro has been divided over the ministries (Source of data: RP Online)
One note to the diagram: you might be surprised about the relatively low budget for education and research. Reason for this, is that responsibility for education is delegated to the individual states in Germany. In total, around 96 Billion Euro is spent on education in Germany.
With the 2006 budget, at least 3 rules will be broken:
- Also this year, the German new deficit exceeds the 3% limit (Maastricht) to 3,3% of GDP. This is the fifth year in a row.
- Another European rule which will be broken again this year, is the limit of 60% of GDP for the total deficit of a country. This year, Germany will reach a deficit of 1.450 Billion, 69% of GDP (2.100 Billion).
- And the third is the German constitution, acoording to which new credits cannot supersede investments. This year, the credits amount to 38,3 Billion and investments only 23,2 Billion
Reducing credits is a top priority for the new government. And looking at the budget, it is clear that the biggest problem lies in the field of employment and pensions. Reducing the unemployment rate and changing the pension system into an affordable one, are key success factors on the way to a balanced budget. This is the biggest challenge for the coming decade.


