Increase in Germany’s spending raises economic risks across Europe

Bloomberg reports that Germany's increased government spending is driving up borrowing costs across Europe. The situation is especially perilous for the countries with high national debt, such as Italy and Spain, where bond rates have already climbed more than 30 basis points. 

According to the news agency, investors are concerned that highly indebted nations may struggle to pay interest on the debt. This may result in another European debt crisis similar to the one that occurred more than a decade ago. 

Despite the risks, some experts are optimistic. For example, Lynda Schweitzer of Loomis, Sayles & Company, who holds Spanish, Italian and French bonds, considers a softer fiscal policy to be a potential driver for economic growth. She believes funding infrastructure and other key sectors will help boost GDP growth and thus partially offset the increasing debt load.