Germany's budget surplus continued to grow last year, reaching its highest level since the reunification of East and West Germany in 1990 and setting off a debate about what to do with the extra cash.

The surplus for 2016 reached 23.7 billion euros (25 billion dollars), about 0.8 per cent of the country's gross domestic product (GDP), Germany's Federal Statistics Office said on Thursday.

Europe's biggest economy also produced a surplus the two previous years, prompting criticism from the European Union, which would like to see Germany spend more, propping up the frail economic output on the continent as a whole.

But Germany has pushed back, partially due to a culture that shuns debt, formalized in legislation that calls for Germany to minimize new borrowing.

"I'm not worried about finding something meaningful to do with any money that might be available," said Chancellor Angela Merkel.

While Germany has slowly been lowering its debt-to-GDP ratio, other countries, particularly in southern Europe, have been struggling in recent years to regain control of their financial situation.

Spain for example is expected to fall short of a 3.1-per-cent deficit target in 2017, while Greece is struggling to push through austerity measures that would satisfy creditors' demands in order to receive a third bailout in seven years.

Critics of Germany's high surplus say that the country could revive the eurozone economy by spending more of its surplus.

The European Commission on Wednesday called on Germany to reduce its current account surplus and instead focus on boosting domestic consumption.

Economists and industry experts, however, have recommended lowering taxes, allowing people working in Germany to directly reap the financial benefits.

"There's a need for investments in infrastructure, better incentive for private investors and most importantly a participation of all citizens in the success through tax relief," said Anton F Boerner, who heads the German Federation of Wholesalers, Foreign Trade and Services (BGA).

Timo Wollmershaeuser, from the Munich-based Ifo economic institute, recommended tax breaks as well, particularly for low-income earners. That would help to offset the low returns that German savers are receiving from some investment products due to record-low interest rates set by the European Central Bank, he said.

Germany's federal statics agency attributed last year's surplus surge to strong economic growth and low unemployment.

Last month, the statistics agency had estimated the surplus figure at 0.6 per cent.

Unemployment in Germany has been hovering around record lows in recent years, reaching 5.9 per cent in January, its lowest level since German unification. It is forecast to be around 6 per cent in 2017.

German GDP in 2016 also grew at the fastest rate in five years, at 1.9 per cent.

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