‘Bell’ for more expensive borrowing due to Rearm Europe
The increase in government defense spending under the Rearm program poses the risk of loans from purchases for all European countries, including Greece, according to a research note by the House Budget Budget, which is jointly signed by the Coordinator of the Office and Economist Yiannis.
However, Greece is in a better position than other EU countries, according to the study. This is because, unlike most EU countries, Greece spends a significant rate of 2% of NATO GDP. In addition, keeping fiscal discipline in the country after the crisis has restored market confidence in our country.
« In any case, Greece must maintain the course of fiscal stability and continue its debt impairment efforts, » the note said, stressing that « the Rearm Europe plan should not be seen as a stoppage of fiscal discipline, but as an opportunity to replace national resources of European funding ».
As he says, the EU will have to spend an amount equal to 3.5% of its total GDP to ensure its defense without US support. Thus, the financial gap is between 1.7% -3.2% of EU GDP. To fill this there are the following options: larger deficits, national debt accumulation, debt reciprocalization at European level, a joint re-equipment bank, tax increase and/or redemption.
The consequences
The note stresses that investment in the defense industry will have significant fiscal consequences throughout the EU. A bond, which is a reference point for the entire eurozone and currently stands at 2.8%, while a month before it was 2.4%.
The high performance of the German bond pushes upwards and the yields of other European bonds, thereby increasing the cost of borrowing. « The curve has shifted up all of the bonds, due to jumps in the yields of versions from the largest European economies, » the note said, adding that it reflects the sale of bonds following the announcement of Germany’s large budgetary package. The Greek 10 -year bond is now exchanged with 3.6%, compared to 3.4% in late February.
