This site uses cookies to improve your experience and to provide services and advertising. By continuing to browse, you agree to the use of cookies described in our Cookies Policy. You may change your settings at any time but this may impact on the functionality of the site. To learn more see our Cookies Policy.
Dublin: 6 °C Sunday 20 October, 2019

Even Germany's cost of borrowing is beginning to rise again

Although Germany’s bond yields are still far lower than a year ago, it’s been rising sharply in the last few days…

GERMANY’S STATUS as a save haven for investors in the midst of the eurozone deb crisis appears to be wilting somewhat.

The cost to the German government of taking out a 10-year loan has shot up in recent days – and has taken a serious spike since yesterday.

The government would have been asked to pay 1.127 per cent annual interest on a 10-year loan if it was borrowing on June 1, the day the result of Ireland’s Fiscal Compact referendum was announced.

Since then, however, the costs have risen steadily – and this morning stood at over 1.5 per cent for the first time in around a month.

The costs remain relatively low, with Germany still largely being seen as robust enough to withstand the shock of a collapse in the eurozone.

Indeed, the costs have reached a historic low on June 1, finding a level not seen before – as investors opted to take a modest, below-inflation return for their investments on the premise that they would, at least, get their investment back at the end.

This morning new figures in Germany showed that inflation there had fallen to 1.9 per cent in the twelve months to May – the first time since December 2010 that it’s been below the 2 per cent level considered ‘ideal’ by Germany and the ECB.

Euro crisis: Spain’s cost of borrowing rockets as Lagarde warns of ‘race against time’

  • Share on Facebook
  • Email this article

About the author:

Gavan Reilly

Read next: