Tax revenue fell by 7.9% in Germany in July. According to the site Thickys Einblick, which cites data from the Finance ministry, while revenue was still €70.91 billion in 2023, this year it is only €63.8 billion euros. The drop in tax revenue in July is mainly due to a crisis in sales tax. Its revenue has fallen by 9%. This is despite the fact that the government increased the tax, commonly known as VAT, from 7 to 19% at the turn of the year.
If the trend goes on linearly, almost €100 billion will be absent from the budget. Finance Minister Christian Lindner (FDP), who lives in Wonderland, had assumed that tax revenue would rise by 4.1% by the end of the year. He has drafted the budget accordingly.
If the trend goes on linearly ... the economic barometer, however, forecasts bad weather. The Composite Purchasing Manager Index (PMI) fell to 48.5 in August 2024, down from 49.1 in July—missing the market forecast of 49.2, according to preliminary estimates. This indicates a slight acceleration of the decline in business activity. Business activity declined for the second consecutive month, with job losses at the highest rate in four years.
The Manufacturing PMI fell to 42.1 in August 2024, from 43.2 in July, below the market forecast of 43.5, according to preliminary estimates. The latest reading indicates a continued sharp decline in the manufacturing sector, now extending to 26 consecutive months. Goods manufacturers faced the sharpest drop in new orders in nine months, due to persistent customer hesitation and weakness in the construction sector.
