Because Europe cannot escape the effects of the American debt it has first touched on the $40 trillion.
The United States' public debt, which has reached $40 trillion, evolves at speed in Problem for the whole world.
The Government borrowing costs internationally has been ejected in recent days to the highest levels in recent years, as fears that war, demographic decline and the unforeseen consequences of technological changes have led Washington public finances to their limits.
As he notes in analysis of POLITICO, the effects also pass on the European financial markets; and European governments are forced to compete with Washington for the global savings reserve. And this competition has become much stronger this year, as American tech giants have borrowed hundreds of billions of dollars, pursuing the expected profits from artificial intelligence.
The cost of ten years' lending Germany, operating as reference point for the rest of Europe, arrived earlier this week in higher level than 2011. Concerns about inflation and the expansion of the US budget deficit, which led to the performance of the 30-year American state bond – that is, the return that investors receive when lending money to the government – at the highest level in the last 19 years.
The problem was further burdened by the news that U.S. government debt has now exceeded $40 trillion.
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As a result, according to POLITICO, many European Union governments are likely to face additional pressures for tax increases or cost cuts – even at the time they try to boost defence spending – when they return from summer holidays and start drawing up next year’s budgets.
And in countries such as France, Spain and Italy, this could easily affect those in particular anyway. strained national elections expected next year.
The leader of the French far right, Marin Lepin, has already made use of the situation on Wednesday to promote a message that will probably be one of the key axes of its campaign campaign ahead of next spring's presidential election, describing the rise in bond yields «relentless account for ten years of longing».
«The time has come to clean the stables of Augustia to which public finances have been converted!»Lepin wrote on social media. He did not, however, give any details of how he intends to achieve it.
Bruno Le Mer, who served as French Finance Minister for seven years, replied that Her party had repeatedly hampered the efforts of President Emmanuel Macron's governments to control the budget deficit – among others, when in 2025 he forced them to abandon proposed reform of the pension system.
The gradual pressure
France’s failure to change course over the years has steadily eroded investor confidence, which now require higher returns to buy French bonds than for Italian counterparts.
As a result, Paris is particularly exposed to a phenomenon that affects almost all European capitals and is known as a risk of refinancing.
Most countries in Europe have accumulated huge debts over the last 20 years, while successive crises, such as the 2008 pandemic and financial crisis, have exacerbated a steady and long-term degradation of public finances due to increasing health and pension obligations.
An indicator illustrating public sector debt in the eurozone increased from 66% of GDP in 2007 to just under 88% last year.
And The European Commission estimates that the rate will continue to increase in the short term, as fiscal deficits are re-enlarged under the pressure of the wars in Iran and Ukraine.
As long as the European Central Bank kept interest rates close to zero, as was the case from 2009 to 2022, the cost of serving this debt remained manageable.
With inflation, however, returning dynamically, the data has changed. The ECB has already raised interest rates once this year, as the US and Israel war in Iran has led to rising oil and gas prices. David Reese, head of global economic analysis at Schroders, expects two more increases of 0.25 percentage point by the end of the year.
Consequently, bonds issued ten years ago at almost zero cost – until 2022 investors actually paid Germany to lend it – should now be refinanced at rates much closer to historical normal levels.
The French statistical agency INSEE estimates that Paris's public debt interest expenditure will more than quadruple within the current decade, from EUR 30 billion in 2020 to EUR 124 billion in 2030.
This is money which, under different circumstances, could be channelled into financing new hospitals, green transition, re-armament — or even tax reductions.
The elections in focus
France is not the only country to face increased borrowing costs at a politically difficult time. Georgia Meloni in Italy and Pedro Sanchez in Spain will claim their re-election the following year, Finland, Greece, Estonia and Slovakia, as well as Poland, which is not part of the eurozone, will also come to the polls.
Both Meloni and Sanchez can, however, draw some optimism from certain factors in their favor.
In Italy, the debt service burden is much less acute, as the country's new bonds are not issued at significantly higher costs than those of a decade ago when Italy was still bearing the stigma of the state debt crisis.
In Spain, παρά το γεγονός ότι ο Σάντσεθ δεν έχει καταφέρει να περάσει νέο προϋπολογισμό από το 2022, η ταχεία αύξηση του πληθυσμού, την οποία έχει ευνοήσει η πιο χαλαρή μεταναστευτική του πολιτική, έχει ενισχύσει το ΑΕΠ και έχει διασφαλίσει ότι στο μέλλον θα υπάρχουν περισσότεροι φορολογούμενοι για να επωμιστούν το βάρος του χρέους. Σύμφωνα με την Ευρωπαϊκή Επιτροπή, το ισπανικό χρέος αναμένεται φέτος να υποχωρήσει ξανά κάτω από το 100% του ΑΕΠ.
Προς το παρόν, η επικρατούσα εκτίμηση είναι ότι η Ευρώπη απέχει ακόμη πολύ από μια νέα δική της κρίση χρέους. Το συνολικό δημοσιονομικό έλλειμμα της ευρωζώνης είναι μόλις το μισό από εκείνο των ΗΠΑ, ενώ η ΕΕ και η ΕΚΤ έχουν καλύψει τα σημαντικότερα θεσμικά και κανονιστικά κενά που συνέβαλαν στην κρίση κρατικού χρέους του 2010.
Εξίσου σημαντικό είναι ότι οι πρόσφατες μεταρρυθμίσεις που προώθησε η κυβέρνηση του Φρίντριχ Μερτς στη Γερμανία αναμένεται να στηρίξουν την ανάπτυξη τόσο στη χώρα όσο και στην Ευρωπαϊκή Ένωση συνολικά, σύμφωνα με τον επικεφαλής οικονομολόγο της Berenberg Bank, Χόλγκερ Σμίντινγκ.
However, η ανησυχία αυξάνεται – ιδίως εξαιτίας της κατάστασης στη Γαλλία.
«Υπάρχει μια δυνητικά μεγάλη ζώνη κινδύνου, στην οποία μια κρίση μπορεί να ξεσπάσει ή και όχι, ανάλογα με τις διαθέσεις των επενδυτών», δήλωσε την περασμένη εβδομάδα ο Ολιβιέ Μπλανσάρ, πρώην επικεφαλής οικονομολόγος του Διεθνούς Νομισματικού Ταμείου.
«Με δεδομένο το επίπεδο του χρέους και του ελλείμματός μας, πιθανότατα έχουμε ήδη εισέλθει στη ζώνη κινδύνου».
