Ignoring EU debt: Germany's true national debt

Ignoring EU debt: Germany's true national debt

The Federal Republic of Germany's mountain of debt is significantly higher than generally assumed, mainly due to the ignored German share of the debt taken on at the EU level. According to a study by the Mannheim Leibniz Center for European Economic Research (ZEW), the undisclosed amount for repayments and liabilities is 261.5 billion euros or more than 10 percent of the current German national debt.

A crucial factor contributing to this development is the “Next Generation EU” (NGEU) Corona recovery fund worth 750 billion euros, which was launched during the pandemic. These debts must be repaid between 2028 and 2058, with Germany having to raise a financing share of 109 billion euros for the repayments and providing guarantees of 134 billion euros for other member states.

It is clear that the Federal Republic's official national debt of around 2,445 billion euros in the fourth quarter of 2023 is greatly underestimated. If you add Germany's EU debt of almost 262 billion euros, the national debt increases by 6.35 percentage points. In addition, special funds that do not appear in the debt statistics are also criticized because they are actually largely financed by loans, which further increases national debt.

It can be seen that German debt practices are unsustainable as GDP growth is expected to decline and debt repayment and implicit public debt are putting significant pressure on public finances. The Federal Republic's hidden debts are classified as more than five times higher than officially stated, which raises questions about intergenerational fairness. It remains to be hoped that Germany can get the debt problem under control in the long term through targeted measures without neglecting the need for social reforms.