FRANKFURT, Jan 8 (Reuters) - Euro zone governments saved 231 billion euros ($264 billion) in debt service costs last year compared with 2007 interest rates, with Germany and France pocketing the most while Italy saved proportionally far less, Bundesbank figures showed on Tuesday. The European Central Bank has kept interest rates ultra-low for much of the past decade, letting governments borrow on the cheap while raising concerns that state finances will become unsustainable once rates return to historically more normal levels.
The ECB is guiding markets for a rate hike towards the end of this year and policymakers often warn that governments have become complacent, spending their savings on general expenditure rather than using low rates to cut debt.
Germany saved 55 billion euros last year compared to rates paid in 2007 while France saved 54 billion, the Bundesbank figures showed. Although Italy sits on the biggest debt pile in the bloc, it only saved 45 billion as it its borrowing costs have remained relatively high.
If euro zone countries had had to pay the same interest rates as in 2007, since the start of 2008 their cumulative saving would equal 1.42 trillion euros, the Bundesbank added.
$1 = 0.8742 euros Reporting by Balazs Koranyi and Frank Siebelt; editing by John Stonestreet