Kiel Subsidy Report 2023: Federal Subsidies in Times of War in Ukraine and Energy Crisis

The federal budgets of 2022 and 2023 are characterized by efforts to cope with problems brought about by the Ukraine war and the ensuing energy crisis. The authors analyze which of the associated additional expenditures are more in line with the classic government task of "providing public goods" and which additional expenditures are more in the nature of subsidies, i.e. belong to the category of financial aid and tax concessions. They show that in 2023 federal financial assistance is set to jump by 113 percent to EUR 208 billion, which is completely beyond the previous scope. The newly installed Economic Stabilization Fund alone accounts for EUR 101.6 billion or almost the half of the financial assistance provided. The financial assistance from the Climate and Transformation Fund is also developing particularly dynamically, and is expected to rise to EUR 34.1 billion in 2023. In addition, tax concessions amount to 75.3 billion euros, according to the data currently complete only for 2022. Based on the authors' estimates, the total volume of subsidies, including autonomous financial assistance from the states, amounted to more than EUR 252 billion in 2022. Due to the introduction of the Economic Stabilization Fund, total subsidies are expected to rise to EUR 362 billion in 2023.