Financial Times: Iran War Raises Eurozone Borrowing Costs to Highest Level in Years

SadaNews - The Financial Times reported that borrowing costs in the Eurozone have risen to their highest levels in years, amid increasing concerns from investors about the impact of the Iran war on the public finances of European countries.

The newspaper stated that the cost of 10-year Italian bonds rose to 4.14% on Friday, the highest interest rate on these bonds since 2024, as traders fear the inflation effects driven by rising oil and gas prices.

Similarly, interest rates on government bonds in France - the second-largest economy in the Eurozone after Germany - increased to 3.9% on Friday, the highest rate since 2009, while the interest rate on Spanish bonds rose to 3.7%.

The newspaper noted growing expectations among investors that the European Central Bank will raise interest rates three times during the current year, as inflation rises due to the energy price shock, affecting household expenses on one hand and transportation and manufacturing costs for companies on the other.

Increase in Public Expenditure

The newspaper quoted Tomáš Viliš, chief macroeconomic analyst at T. Rowe Price advisory, saying that investors are beginning to realize that we are "heading towards a mix of low growth and high inflation," in addition to increased government spending.

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