Germany cuts debt in 2015

Unemployment falls

FRANKFURT, March 31, (AFP): Germany, Europe’s biggest economy, shaved 24 billion euros ($27 billion) off its overall public debt burden to 2.153 trillion euros in 2015, the country’s central bank, or Bundesbank, said on Thursday.

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 percent and Germany has pledged to bring its own debt back below the 60-percent 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 percent last year accounted for 2.7 percentage points of the reduction in the overall debt ratio.

Germany kept unemployment at historic lows in March as the recovery in Europe’s biggest economy remains on track, unfazed by global uncertainties and a huge influx of refugees, data showed on Thursday.

The unemployment rate -- which measures the jobless total against the working population as a whole -- stood at 6.2 percent in March, unchanged from February.

In numerical terms, the number of people registered as unemployed in Germany stood at a seasonally-adjusted 2.728 million, also unchanged from the previous month, the Federal Labour Office said in a statement.

At current levels, unemployment now stands at the lowest level since West and East Germany reunited in 1990 after the fall of the Berlin Wall the previous year.

In raw, or unadjusted, terms, the jobless total decreased, falling by 66,270 to 2.84 million. The unemployment rate eased fractionally to 6.5 percent in March from 6.6 percent in February, the office said.

“Despite global uncertainties, the German economy got off to a good start in the first quarter of this year,” the labour office said.

“Growth is likely to exceed the 0.3 percent recorded in the previous quarter as a result of the mild winter weather. But growth will flatten out as the year progresses,” it continued.

“Economic expectations, after declining sharply recently, have stabilised, but don’t point to any strong momentum. The labour market is continuing to develop positively,” the office added. Analysts welcomed the data. “Despite a temporary slowdown in growth caused by China and the crisis in some other emerging markets, Germany continues to create ever more jobs,” said Berenberg economist Holger Schmieding.

Strong gains in real disposable incomes and fiscal stimulus for 2016 pointed to further strength ahead, he said.

“In turn, solid employment growth will underpin consumer spending, helping to cushion the German economy somewhat against external shocks,” the expert said.