Just glancing at the difficult budget situation for the federal government can be deceptive. This is because most people only talk about the high level of debt, high annual deficits, and funding gaps. And in fact, tax revenues are not sufficient to cover planned expenditure every year. Nevertheless, thanks to inflation and the debt brake, the state has recently managed to slowly reduce its debt ratio. The 60 per cent threshold is within sight.

However, the high level of debt is also offset by significant financial assets. At the end of 2023, these totalled 1.14 trillion euros for the federal government, federal states, municipalities and municipal associations, as well as social security and extra budgets, according to the Federal Statistical Office.
It also grew by 0.5% or 5.3 billion euros within one year. Government debt, in turn, stands at around 2.6 trillion euros.

Financial assets include shareholdings in public and private companies, owned properties such as flats, castles or land, as well as shares in banks. The recent sale of a block of Commerzbank shares has been making headlines, with accusations of naive or even unprofessional behaviour, because politicians seemed unaware that Italian bank Unicredit could exploit this opportunity to further its takeover ambitions.

The financial assets of all public transport companies in the local public transport sector have now also been included in the calculation, as the federal government provides significant support to these companies by financing the Deutschlandticket and they are „no longer predominantly financed by their sales revenues“, as the statisticians explain.

The federal government alone reported a decline in its financial assets of 1.2% or 5.3 billion euros to 447.5 billion euros. This development is primarily due to the portfolio reduction at FMS Wertmanagement, which was founded in 2010 as a bad bank for assets of the nationalised Hypo Real Estate Holding.

The financial assets of the federal states fell by 3.8% or 10.5 billion euros to 269.0 billion euros. Local authorities increased their financial assets by 4.8% to 246.3 billion euros. And social security assets totalled 180.8 billion euros – an increase of 5.8%.

Economists always advise politicians to sell at least those assets that are not directly necessary for government strategy. In the case of Deutsche Telekom and Deutsche Post, this has been highly successful. In the case of Deutsche Bahn, the state is still deeply involved, and has even got the company deeper and deeper into trouble by failing to invest and making poor management decisions.

If one assumes that the role of the state is also to ensure a modern and smoothly functioning infrastructure as a prerequisite for a successful market economy, one can certainly argue in favour of the railways remaining in the hands of the state. But ultimately, the problem here seems to be that politicians are not clear about what they want: to take full control of the railways – but then with a lot of additional investment, or to privatise – but then set the framework conditions in such a way that the necessary investment is made, while taking into account the profit expectations of investors.

For many other holdings, which the state clearly manages worse than private investors, there is a need to sell. For example, getting out of the state-owned residential properties managed by the Federal Real Estate Agency. The federal government uses these properties to provide its employees with subsidised housing. The problem: the vacancy rate is around 20%; on the open market it is only 2.5%. The investments could therefore be utilised more profitably. Nevertheless, the federal government wants to continue building flats.

However, the national silverware is too valuable to plug gaps in the federal budget with privatisation proceeds – and on top of that, the programme of sales would soon fizzle out. But why not use the money to alleviate the demographic burden? After all, the generation that financed the silverware is partly responsible for the fact that social insurance schemes can no longer finance the changing demographics. The increases in contributions that are already on the horizon will primarily affect young people and future generations. Worse still, with the new pension reform package, the baby boomers are shirking even more of their responsibility; in fact, they are the biggest beneficiaries. If, on the other hand, the privatisation proceeds were to be fed into the planned „generation capital“ fund, which is intended to provide financial support for old-age provision in future, this would be a far more sensible use.