Exclusive: Germany sees windfall from lower borrowing costs, sources say
BERLIN - Germany could enjoy a windfall of 5 billion euros or more this year as record-low bond yields slash its borrowing costs, three people familiar with Berlin’s budget planning told Reuters on Thursday.
At same time, the cheaper borrowing eases pressure, mounting as the economy slows, to abandon Berlin’s balanced-budget policy of not taking on new debt for additional spending.But the European Central Bank’s loose monetary policy and worldwide demand for safe-haven bonds mean Berlin now expects to pay 10 billion to 13 billion euros, an official familiar with the budget planning told Reuters on condition of anonymity.
The ECB on Thursday promised an indefinite supply of fresh asset purchases and cut interest rates deeper into negative territory as it tries to prop up the ailing euro zone economy. ECB President Mario Draghi also called on Germany to counter the risk of a recession with more fiscal action. Scholz promised to maintain a high level of public investments despite Germany’s deteriorating growth outlook, adding Berlin was mulling an investment program worth at least 400 billion euros over the next decade, probably even more.
Former conservative Finance Minister Wolfgang Schaeuble and his centre-left successor Olaf Scholz should thank Draghi for this gift, Kindler said, adding that the widespread criticism of the ECB among German conservatives was hypocritical.
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