Germany, Europe’s biggest economy, shaved €24 billion off its overall public debt burden to €2.153 trillion in 2015, the Bundesbank said on Thursday (31 March).
Measured against the gross domestic product (GDP), that meant Germany’s total public debt ratio fell to 71.2 percent last year from 74.7 percent in 2014, the Bundesbank calculated.
Under EU rules, a member state’s overall debt must not exceed 60 percent of GDP.
Nevertheless, the EU average stands at 86%, and Germany has pledged to bring its own debt back below the 60% limit by 2020.
Germany’s public finances have been in surplus since 2014, thanks to the robustness of its domestic economy and low interest rates and the government is using the budget surplus to bring down its overall debt.
The Bundesbank calculated that GDP growth of 1.6% last year accounted for 2.7 percentage points of the reduction in the overall debt ratio.
German inflation likely turned positive in March, preliminary state data suggested on Wednesday (30 March), providing some evidence that the European Central Bank’s expansionary monetary policy aimed at fighting deflation in the eurozone is gaining traction.
Annual consumer price inflation back above zero in four German states, the data showed. In the state of Brandenburg, annual inflation was zero and in the most popular state, North Rhine-Westphalia, it rose to 0.4% from 0.1 last month.
A Reuters poll of economists, taken before the release of the state figures, pointed to annual pan-German EU-harmonised consumer price inflation (HICP) of -0.1% in March after -0.2% in February.
Deutsche Bank economist Oliver Rakau said the rise indicated by the state data was expected, partly because of increased spending in the lead up to the Easter holidays when many Germans go on vacation.
“We expect that inflation will gradually normalise over this and next year, but to remain low all-in-all,” he said.