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BUDGET

Mega budget surplus is Germany’s best since 1990

Germany ran up a record surplus in its public finances in 2015, with Europe's biggest economy showing "solid and consistent" growth last year, the federal statistics office said on Tuesday.

Mega budget surplus is Germany's best since 1990
Photo: DPA

Germany notched up an overall surplus of €19.4 billion on its public budgets last year, “which in absolute terms is the highest since unification” in 1990, the office said in a statement.

Measured against gross domestic product (GDP), the surplus amounted to 0.6 percent of overall output, the statisticians calculated.

In 2014, Germany had achieved a surplus of €8.9 billion or 0.3 percent of GDP.

Under eurozone rules, member states are not allowed to run up deficits in excess of 3.0 percent of GDP and are obliged to bring them into balance or surplus in the medium term.

Last year was the second year in a row that Germany's public finances have been firmly in the black.

At the same time, the statistics office confirmed a preliminary estimate that the economy expanded by 0.3 percent in the fourth quarter of last year, the same rate of growth as in the third quarter.

“The economic situation in Germany in 2015 was characterised by solid and consistent growth,” the office said.

Across the whole year, GDP grew by 1.7 percent.

“Positive impulses came primarily from domestic demand,” Destatis said.

Public spending increased by 1.0 percent in the fourth quarter and household spending edged up by 0.2 percent.

In addition, investment increased with construction investment expanding by 2.2 percent over the three-month period and investment in equipment rising by 1.0 percent, driven primarily by public investment.

By contrast, foreign trade had a dampening effect on fourth-quarter growth with exports falling by 1.7 percent and imports slipping by 0.6 percent, Destatis calculated.

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BANKING

Card over cash? Why Germany is seeing a new payment preference

Cash has long been king in Germany, with many smaller retailers refusing to join the rest of the world in adopting contactless payment systems. But card-based payments are on the rise, as recent stats about Girocard use reveal.

Card over cash? Why Germany is seeing a new payment preference

Germany has long been a very cash-based country, occasionally to the dismay of frustrated tourists at the Döner shop.

A few German phrases express the people’s love of physical money. There’s ‘only cash is true’ – Nur Bares ist Wahres. Or Bargeld lacht, literally meaning cash laughs, but used to imply that cash is what’s wanted, similar to ‘cash is king’ in English.

But the classic German preference for cash appears to be evolving, as the use of girocards is growing, even for small transactions.

How are girocards being used?

Girocard, an ATM and debit card service offered by German Banks, was designed to allow customers to use virtually all German ATMs and, increasingly, to make purchases at businesses.

READ ALSO: Ask an expert – Why is cash still so popular in Germany, and is it changing?

Last year, consumers in Germany used their Girocard more often than ever before for cashless payments. A total of €7.48 billion payment transactions with the plastic card were counted – 11.5 percent more than in the previous record year 2022, according to figures published by the Frankfurt-based institution Euro Card Systems.

Whether at the bakery, petrol station or supermarket, customers are increasingly pulling out their cards at the checkout, even for smaller amounts. As a result, the average amount paid with the Girocard fell from €42.34 to €40.69 within a year. 

The rise of card payments in Germany

Contactless payment, which is possible with girocards and credit cards that have an NFC chip, got a boost during the Covid pandemic, as retailers promoted it for hygiene reasons. 

But the use of card payments has continued to grow in Germany since then, boosted partly by the increasing use of girocards.

Promoting the use of girocards, some German banks have expanded their cards’ functions: Sparkassen, Volksbanken, or Raiffeisenbanken offer girocards for the digital wallet, for example.

Banks want to continue upgrading the payment card with further applications. For example, a project is being tested which would add an age verification function to girocards that would be useful when a customer is buying cigarettes.

On the retail side, it’s clear why the Girocard is preferred to other debit options.

“We see that debit cards from international providers cost up to four times more,” Ulrich Binnebößel, Head of the Payment Systems & Logistics Department at the German Retail Association (HDE) told DPA.

What’s the difference between the Girocard and other debit?

The Girocard is a strictly German phenomenon. It can be seen as the latest iteration of the EC card, which was created to consolidate payment systems following the unification of former East and West Germany.

In 1991 different debit card systems, including Eurocheque guarantee cards from former West Germany and Geldkarte ATMs from former East Germany, were unified into Eurocheque cards.

Then in 2001, the Eurocheque system was disbanded, but German banks continued to use the EC logo for “electronic cash’” cards, or EC cards. In 2007, the German Banking Industry Committee introduced Girocard as a common name for electronic cash and the German ATM network.

Girocards are only issued and accepted in Germany, so if you want to get one of your own, you’ll have to join a German bank, and shell out those notorious German banking fees.

READ ALSO: Why it’s almost impossible to find a free bank account in Germany

Alternatively, you can get by with internationally accepted debit cards provided by a bank in your home country, or otherwise by joining an app-based European banking service like N26. 

But be warned, without the Girocard in hand, at some smaller retailers you may be told, “Leider nur Bargeld oder EC-Karte.

With reporting by DPA

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