Federal Government Deficit below the Limit in 1998

The preliminary audit figures for the 1998 Federal budget show that consolidation was continued in the past year. It should be noted that the once-only measures, which had still made noticeable inroads on the deficit in 1997, were rather weaker in their impact in 1998. For some items on the expenditure side the trend needs to be watched closely; they include in particular personnel costs for teachers at the Länder level, some social transfers and the federal contribution to the old-age pension insurance schemes. On the other hand, low interest rates improved the financial manoeuvring room. If this development were to be reversed negative effects could well accumulate. The same applies to investments, where further restrictions are difficult to envisage. A point requiring clarification in the long term is the interaction between governmental units, especially the extent to which the federal government should further extend its role as overall financier of all budgets.