August 14, 2014 / 8:03 AM / 3 years ago

German public debt falls for first time in post-war era

BERLIN, Aug 14 (Reuters) - Germany reduced its roughly 2 trillion euros of public debt last year for the first time since post-war records began in 1950, helped by the reduction of toxic assets in government-run bad banks, the Statistics Office said on Thursday.

The combined debts of the federal government, the 16 federal states and local authorities plus social security fell by 1.5 percent, or 30.3 billion euros. That leaves the overall debt burden in Europe’s biggest economy at 2.04 trillion euros.

The strongest decrease, 5.2 percent, was in the area of social security, said the Statistics Office.

Federal and state government debts had been eased because toxic assets that came from state-owned banks Hypo Real Estate and WestLB were off-loaded. These assets were parked in so-called bad banks during the global financial crisis.

At the federal level, Germany is aiming to have no new borrowing next year. Low employment and steady growth have generated record tax revenues while rock-bottom interest rates have reduced the burden of servicing Germany’s 1.3 trillion euros of federal debt.

In the next three years, the federal government expects its debt as a percentage of gross domestic product (GDP) to fall to under 70 percent from nearly 80 percent. (Reporting by Madeline Chambers; Editing by Noah Barkin)

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