The Federation of Taxpayers Warns
The Federation of Taxpayers has warned of a drastic increase in interest costs by the year 2029. This development could have significant impacts on the financial planning of the federal government and also affect the interest rates for savers and investors.
Background and Forecasts
- Increase in Interest Costs: The Federation of Taxpayers predicts that the federal interest expenses could rise from currently 30 billion euros to 62 billion euros by 2029. This would mean that additional tax revenues from soaring interest expenses would be almost completely consumed.
- Fiscal Policy Impacts: This development could significantly impair the financial strength of the state. The Federation of Taxpayers criticizes the debt policy of the federal government and the shifting of expenses into special assets, which are referred to as “accounting tricks” and “creative accounting.”
Impacts on Savers and Investors
- Interest Rate Situation: Currently, interest rates for savers are often low, whereas theoretically higher rates are rare.
- Investment Decisions: An increase in interest costs could affect the attractiveness of investments, as higher interest rates increase borrowing costs, making investments more expensive.
Political and Economic Implications
- Federal Government and Financial Planning: The government faces the challenge of adapting financial plans to rising interest costs, which may lead to reduced investments or expenditures.
- Economic Stability: A drastic increase in interest costs could affect economic stability, as higher interest rates could dampen consumer and investment willingness.
Overall, the warning from the Federation of Taxpayers has significant implications for financial policy and economic development in Germany.