German Debt Burden Hits 12-Year High
Net interest expenses for August 2023 of the central government were recently reported by the German Federal Ministry of Finance at €4.7bn. The net interest expenditure for the year-to-date period from January to August 2023 is therefore €38.6bn. This is an increase of 106% on the same period last year and the highest level in more than 10 years or since we started manually compiling data, including special budgets and one-offs in 2011. It is very likely that a higher debt burden goes back much further than that, but we lack comparable data.
Needless to say, the above does not reflect nominal growth. With this in mind, the debt burden for the current year up to August is 0.95% of nominal GDP, which is only the lowest level since 2013 as illustrated below.
Should you wonder, why the hike in interest expenses comes so suddenly and extremely and what it has to do with selling bonds at discounts or premiums, please check our comprehensive research note HERE or our initial note dating back to 2016 (in German) HERE.