The debt of the German federal government, states, and municipalities continued to rise in 2023, reaching nearly 2.5 trillion euros. On a per capita basis, this amounts to 28,943 euros per person, according to the Federal Statistical Office. Understanding these figures becomes clearer when comparing debt to overall economic output.

The „debt ratio“ is a key metric for such comparisons and is used to assess whether European debt rules are being met. Currently, this ratio stands at approximately 64%. Values below 60% are considered desirable by economists, while values above 90% are seen as problematic due to potential self-reinforcing dynamics. However, this ratio alone can seem abstract. A more tangible perspective emerges when comparing per capita debt with per capita value creation. In 2023, gross value added was 4.12 trillion euros, or 48,750 euros per person. Thus, the „personal“ debt of 28,943 euros is quite close to the „personal“ value creation.

While these figures might still be deemed manageable, especially considering the big improvement since the early 2010s, the per capita comparison highlights a crucial point: the financial sustainability of debt directly depends on the people driving economic growth. With the anticipated demographic decline, increasing immigration into the workforce is urgently needed. Without it, per capita debt could surge. Furthermore, the economy must grow more robustly through smart investments, innovations, higher productivity, and tapping into new markets. Recent trends have been moving in the opposite direction in all three categories. It is therefore time to take action. Growth needs to be stimulated more aggressively than planned, and better conditions for research and development must be established to lay the foundation for future growth. Without these steps, austerity and inflation often become the inevitable outcomes.