Germany benefited from Greek crisis
Greece’s debt crisis saved the German government about 100 billion euros in bond interest payments, outweighing the possible budget impact of a Greek default, an economic institute said. Germany benefited “disproportionately” as investors fled to the safety of bunds, the IWH institute said in a study published yesterday. Yields on German government bonds since 2010 fell as a result, leading to savings for the government that are bigger than the losses it would face if Greece defaulted on all debt it owes Germany, according to Halle, Germany-based IWH. “These benefits should not be overlooked,” IWH said in an e-mailed summary of the study, which put Germany’s exposure to Greece at about 90 billion euros, including the proposed third bailout package. The savings were calculated by simulating “a hypothetical German government bond yield in a scenario in which German interest rates would be independent from the European debt crisis.” German Chancellor Angela Merkel has drawn criticism for her stance on Greece and some have urged Germany to pass on the savings to Greece to help speed the country’s economic recovery. Instead, Merkel is accelerating debt-reduction plans as record-low yields reduce refinancing costs. The German government says it plans to reduce federal debt to less than 70 percent of gross domestic product in 2016 and to 61.5 percent by 2019. The limit set in the European Union’s Maastricht Treaty is 60 percent. While low rates help the government cut interest on the national debt, they also mean lower income for savers, Ifo economic institute President Hans-Werner Sinn
An employee of a glass products company carries a pane of glass in the industrial area of Sindos, west of Thessaloniki. A survey conducted by the city’s local chamber of commerce (EVETH), which was published yesterday, found that 83 percent of Thessaloniki businesses were affected by the imposition of capital controls.