Germany plans to raise more than 200 billion euros next year and another 838 billion euros between 2027 and 2030, breaking with three decades of fiscal restraint. GoldBroker analyst Laurent Maurel argues that as the eurozone's fiscal anchor turns to heavy borrowing, gold priced in euros stands to benefit.
Germany, long the eurozone's guarantor of fiscal discipline, is preparing to borrow on a scale it once refused. Friedrich Merz's government plans to raise more than 200 billion euros as early as next year, followed by an additional 838 billion euros between 2027 and 2030. A large share will fund rearmament and a near-€500 billion infrastructure program.
Why the German model is cracking
The shift is not driven by military spending alone. The German economic model is likely facing its deepest crisis since reunification, with an industrial base spanning automotive, chemicals, steel, and machine tools. Nuclear power generation has fallen from about 170 TWh a year in the early 2000s to virtually zero today, leaving industry dependent on costlier gas and, after the war in Ukraine, expensive liquefied natural gas imports.
At the same time, China has become a direct competitor in sectors Germany once dominated. Had industrial production simply continued its 1993–2017 trend, it would be about 24% higher today than it actually is. Berlin is borrowing, Maurel argues, because its industrial model is running out of steam.
Who buys the debt
The harder question is who absorbs the new issuance. The European Central Bank is gradually shrinking its balance sheet, and France, Italy, Belgium, Spain, the United Kingdom, and the United States are all issuing debt at the same time. German 10-year yields have already moved from negative territory to nearing 3%, even before the debt program launches. More supply could push investors to demand a higher risk premium.
The cost is mounting. German interest payments are expected to nearly double, rising from about €42 billion next year to nearly €81 billion in 2030.
Where gold fits in
Maurel frames this as a regime shift in which gold regains its monetary role. Gold is no one's debt and depends on no parliamentary vote or central bank. If the eurozone's last major advocate of restraint embraces heavy borrowing, he suggests, gold denominated in euros could become one of the main beneficiaries of this historic shift.
Source: GoldBroker.com
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