BERLIN, March 18 Germany will save at least 15
billion euros over the coming decade thanks to its "safe haven"
status among investors fleeing the euro zone debt crisis, which
has driven down Berlin's borrowing costs, a leading German
institute said on Monday.
Germany's rock-bottom interest rates, which are helping the
government to cut its own debt and achieve a balanced budget,
stand in sharp contrast to euro zone peers such as Greece and
Portugal which remain locked outside global financial markets.
The findings of the independent Kiel Institute for the
Economy (IfW) coincide with an upward tick in borrowing costs
for struggling euro zone states, after a relatively subdued few
months, due to inconclusive elections in Italy.
A controversial bailout for Cyprus over the weekend that
includes a levy on that country's bank deposits has also rattled
investors, increasing the allure of German debt and adding to
upward pressure on that of euro zone periphery states.
In 2013 alone the "safe haven effect" will net savings for
the federal government of around two billion euros, according to
IfW expert Jens Boysen-Hogrefe.
Investors have flocked into German debt especially from
2011, the IfW study showed, pushing yields below rates set by
the European Central Bank.
The study could increase calls from Germany's euro zone
peers to do more to boost its domestic demand. Chancellor Angela
Merkel's government has encouraged employers to grant higher
wage increases but resisted pressure to cut taxes or boost
spending, saying its priority must be to cut the country's debt.
Last week, the government announced net new borrowing would
sink to 6.4 billion euros in 2014, its lowest level in four
decades, and that its structural deficit would be eliminated.
It also said Germany would take on no new debt in 2015 and
would have a budget surplus of 5 billion euros in 2016.
Surging tax revenues - the result of strong growth and low
unemployment in Europe's largest economy - have also contributed
to Germany's healthy budgetary situation.