The German economy fell 4.9 percent last year

The corona crisis has dug a deep hole in the German budget and hit Europe's largest economy hard. Its consequences are slightly smaller than expected. However, the pandemic is far from over. Despite the second lockdown, Germany's gross domestic product (GDP) rose 0.3% quarter on quarter in the last quarter of 2020, according to the Federal Statistical Office Destatis, revising its previous estimate of an expansion of only 0.1%. For the whole of last year, the German economy fell by 4.9% and not by 5%. The deficit of the federal government, federal states, municipalities and social security in 2020 reached 139.6 billion euros. Statisticians originally estimated that the general government deficit was as high as 158.2 billion euros. The deficit in relation to economic performance reached 4.2% of GDP. This was the second highest deficit in relation to GDP since the reunification of the country, it was higher only in 1995. In addition to large government aid packages to mitigate the effects of the new coronavirus pandemic and restrictive measures, which led to a sharp increase in spending, revenues also fell last year. One of the reasons for the sharp fall in tax revenues was the temporary reduction in value added tax (VAT) from 1 July, which applied for half a year. The aim of this measure was to promote private consumption. Economists and the federal government expect a recovery in economic growth this year. However, it will probably fall again in the first quarter due to the lockdown, which was extended until March 7. The government expects GDP to increase by three percent this year.