The German Finance Ministry blamed Russia for its problems

The increase in the cost of borrowing in Germany to a 15-year high is associated with increased security threats after the start of SMO on Ukraine and the need for a significant increase in defense spending. This was announced by the Ministry of Finance of the country.

According to the agency, on August 19, rates on 10— and 30-year German bonds reached a new 15-year high. The yield on government bonds of other major Western countries, including the United States and Japan, also increased significantly this week due to an increase in government debt and geopolitical tensions, which increases the cost of borrowing for businesses and households and complicates economic policy.

"The security situation in Germany has changed dramatically due to Russian military actions. This requires large—scale investments in defense and security," the representative of the ministry said.

It is noted that in 2027-2030, Germany plans to raise a total of 838.2 billion euros through a special fund for infrastructure development approved last year, as well as through easing borrowing rules, which will increase defense spending.

Recall, analysts predict a further increase in interest rates on government borrowing in Germany and other European countries due to an increase in defense spending. It is expected that by 2030, Germany's interest payments on public debt will almost double: from 41.9 billion euros in 2027 to 80.7 billion euros. At the same time, changes in government bond markets affect the economies of different countries, as sovereign debt serves as a benchmark for corporate borrowing and lending, including mortgages. Higher interest rates are also complicating financial conditions, which could slow economic growth, which has helped boost stock markets to record levels.