Germany saved 100 billion euros from Europe's debt crisisStaff writer ▼ | August 11, 2015
Germany has saved €100 billion since 2010 because its borrowing costs have fallen during Europe’s debt crisis, savings that outweigh the cost of the crisis to the German economy, an economic think tank has reported.
European economy The total savings from 2010
The institute created a model of a fictitious “normal” situation, without the crisis, to establish what German interest rates would have been, based on inflation and slack in the economy.
The report observed a close connection between political flashpoints in the euro zone debt crisis and fluctuations in the interest rate on German government bonds.
Interest on German government bonds fell sharply when markets saw bad news out of Greece, such as Greek prime minister Alexis Tsipras’s decision in late June to hold a referendum on reforms demanded by its creditors. Similarly, rates rose on good news from Greece.
The total savings from this pattern since 2010, an estimated €100 billion, far outweigh the costs of the euro zone crisis to the German economy, even if Greece were to prove completely unable service its debts, the institute said. ■