Refugee crisis set to gobble up German budget surplus | Fin24
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Refugee crisis set to gobble up German budget surplus

Oct 19 2015 20:30
Leopold Scholtz

The Hague - Instead of looking forward to a healthy budget surplus, Germany is moving in the direction of a deficit of several billion euros.

The German news magazine Der Spiegel this week reported that the refugee crisis is to blame for this.

Sources in the German ministry of finance have told the magazine that the deficit may top €10bn in the coming 2016 financial year. In Europe the financial year generally coincides with the calendar year.

Late in August it was reported that the country posted a record-breaking budget surplus of €21bn in the first half of 2015. Barring accidents, this meant that a surplus of more than €40bn could be expected for the entire year.

In the light of the leaks to Der Spiegel, it would appear that there might still be a surplus this year as such, although not nearly as much as expected. And the crisis will really start to bite next year, when a deficit of more than €10bn is expected.

The main reason for the deficit is assumed to be the fact that the state will have to fund a huge programme to build affordable housing for the refugees. At present, they are being housed in almost any structure with a roof – from empty churches and office buildings to abandoned military barracks and even tents.

Besides, billions will have to be paid out - at least in the short to medium term - in unemployment benefits. And the European Union has just reached an agreement with Turkey according to which the 28 EU nations will help that country to the tune of €3bn to prevent more refugees from flooding Europe.

Some estimates emanating from government sources state that up to 1.5 million refugees are expected to flood into Germany alone. Several hundreds of thousands are flocking to other European countries as well, but it is not known what the financial consequences elsewhere will be.

germany  |  refugees  |  europe economy


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