The phenomenon is slow and gradual, but it is beginning to mark a profound economic shift. After having experienced eighteen months in almost continuously negative territory, the interest rates at which European states borrow have returned to above zero. That of French ten-year bonds, which had reached a low point of -0.38% in mid-December 2020, is now close to 0.2%. The Netherlands went from -0.5% to 0%. Italy also gained half a point, to 0.9%. Only Germany, judged by the markets to be the least risky country, remains in the negative zone, at -0.2%. The movement follows that of the United States, much more advanced, where the ten-year borrowing rate has taken 1.1 points in almost a year, rising to 1.6%.
This development is not without risk in the postpandemic context, the States having become heavily indebted. Between 2019 and 2020, French public debt rose from 97% of gross domestic product (GDP) to 115.7%, a historic leap. That of the euro zone increased from 85% to 102%. In this context, the slightest movement in interest rates becomes very sensitive for debt sustainability. The risk of a financial bubble bursting also arises: for years, low interest rates have caused capital flight to the riskiest markets, such as the stock markets, which yield more; the turnaround could suddenly deflate them.
- Why are the rates going up?
“The anomaly was the negative rates, recalls François Ecalle, president of the public finance analysis association Fipeco. In itself, their increase is a pretty good sign. This means that investors are anticipating a little more inflation and growth. “ Eric Dor, director of economic studies at Iéseg, a business school, shares the same point of view: “If rates remained negative, it would be a sign of a slump in the economy. “
The rise in rates reflects the gradual recovery of economies as populations are vaccinated and health restrictions are lifted. At the same time, inflation is making a comeback. In the euro zone, the level remains reasonable, reaching 1.6%, over twelve months, in April. In the United States, the alarm is starting to sound: the rise in prices has reached 4.2% over one year.
It comes from the conjunction of two factors: the sudden increase in demand, with deconfinement, and production bottlenecks, with global supply chains disrupted by the pandemic, causing shortages: from wood to semiconductors. , through bicycles. Growth and return inflation: rates had to increase.
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