Germany has 6.3 billion euros ($6.9 billion) more than expected to help finance the 2024 budget, according to provisional budget accounts for 2023 published by the Union Finance Ministry on Tuesday. Around 3.5 billion euros less was spent in 2023 than planned, while income was slightly higher than expected, the accounts showed.

"The funds will contribute to financing additional burdens in the 2024 federal budget," the ministry said, without giving details. The money could be used for a special fund for floods in the Ahr Valley, which was created in 2021 and had 2.7 billion euros earmarked for 2024.

That means a suspension of the country's debt brake - which aims to limit government borrowing - will probably not be necessary this year.

The government said previously it was analysing a potential suspension of the debt brake, which is allowed to cope with natural disasters or emergency situations, to support the special fund for the floods.

Europe’s largest economy contracted by 0.3 per cent year-on-year in 2023, as high inflation and firm interest rates bit into growth, the Federal Statistical Office of Germany said Monday.

The estimate is in line with the expectations of analysts polled by Reuters. The decline in economic output eases to 0.1 per cent when adjusted for calendar purposes. “The overall economic development in Germany stalled in 2023 in the still crisis-ridden environment,” said Ruth Brand, president of the federal statistics office, according to a Google translation. “Despite the recent declines, prices remained high at all levels of the economy. Added to this were unfavorable financing conditions due to rising interest rates and lower demand from home and abroad,” Brand added.

German inflation ticked up by 3.8 per cent year-on-year in December on a harmonised basis, the statistics office said. The European Central Bank in December opted to hold rates unchanged for the second consecutive time, shifting its inflation outlook from “expected to remain too high for too long” to expectations that it will “decline gradually over the course of next year.”

(With Reuters inputs)

Around 3.5 billion Euros less was spent in 2023 than planned.

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