Germany has profited from the Greek crisis to the tune of €100 billion, an independent study showed yesterday, as Berlin continued to dig in its heels over signing off a third bailout for the struggling country.
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In its study the Halle-based Leibniz institute for economic research created a fictitious “normal” situation to establish what German interest rates would have been.
“These savings exceed the costs of the crisis – even if Greece were to default on its entire debt”, it said.
During the ongoing Greek economic crisis, Germany has taken a tough stance on bailout demands, prompting Athens to quickly pass unpopular laws to raise taxes and cut pensions.
As frightened bond investors have fled Greece and other troubled economies since 2010, they have piled heavily into German debt, which is seen as relatively safe.
“The debt crisis resulted in a reduction in German bund rates of about 300 basis points, yielding interest savings of more than €100 billion ($110 billion) or more than 3% of gross domestic product during the period 2010 to 2015”, it said.
Finance Minister Wolfgang Schaeuble has opposed a Greek debt write-down while pointing to his own government’s balanced budget.
IWH said other countries – including the United States, Netherlands and France – also benefited from Greece’s debt crisis, as investors sought less risky government bonds, but the effects were significantly smaller.
Similarly, rates rose on good news from Greece.
“Even (Taiwan OTC: 6436.TWO – news) if Greece doesn’t pay back a single cent, the German public purse has benefited financially from the crisis”, said the institute.
The most obvious examples are the recent Greek capitulation and today’s third bailout deal, which look very much like they were written in Berlin and then translated for everyone else to sign.
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The European Commission said Tuesday that Greece and its creditors reached a deal “in principle” over a new aid package worth about $95 billion.
