Photographer: Martin Leissl/Bloomberg

Germany May Have to Thank Draghi for Its Budget Surplus

Don't tell Schaeuble who deserves the credit for his “black zero”

The “black zero” is very popular in Germany. And no, it’s not a death-metal band.

“Schwarze null” is the name generally given in the German press to the budget surplus the country achieved in 2014 and 2015, without the need to take on new debt. Such fiscal restraint is a reason for pride in Germany and is compared favorably with the perceived reckless debt-taking of southern European countries.

Still, a new study argues that Finance Minister Wolfgang Schaeuble owes much of this success to the low-rate policy of European Central Bank President Mario Draghi — the same policy Schaeuble criticized in April for robbing German pensioners of their savings and contributing to the rise of right-wing populists.

An analysis by Karolin Herrmann at Deutsches Steuerzahlerinstitut, which researches fiscal topics, shows that the “black zero” is mostly a consequence of one-off factors — chief among them lower interest payments on Germany's public debt.

The study estimates that Germany saved a total of 72 billion euros ($82 billion) in smaller interest payments from 2011 to 2015. This compares with a budget surplus of 13 billion euros in 2015.

Draghi himself has often made the case that even if low rates depress savers’ returns, they help by supporting activity in other parts of the economy.

“Interest rates are low because growth is low and inflation is too low. Think about the alternative: if we raised rates now, it would be bad for the economy and we would unleash deflation, unemployment and recession,” he told Germany's best-selling tabloid Bild on April 27. “Besides, many savers benefit from low interest rates as they are also home-buyers, taxpayers, entrepreneurs and workers whose companies are benefiting.”

Before it's here, it's on the Bloomberg Terminal.