Germany’s 30-year Bund yields around 3.41% as of Sept 2, 2025—the highest since 2011. The longer a loan runs, the more risk the lender fears, so longer bonds carry higher yields. That level shows investors are pricing in heavier future borrowing costs and a bigger risk premium.

Debt per person briefly topped €30,000 on July 29, 2025, a figure experts tie to the Schwarz-Rot coalition loosening the debt brake and signaling more long-term borrowing, hence higher demanded yields. This isn’t Germany’s lone story; many Western countries are borrowing more and seeing higher yields, though Germany still holds AAA ratings implying very low default risk. Still, the bond market is sending a blunt message: easy credit-fueled spending costs more in debt service and crowds out other spending.

The ifo Institute warns the federal budget’s interest burden could rise sharply by 2040—roughly 13% of the budget under some growth-and-rate paths, potentially above 16% if conditions differ. That underscores the need to safeguard investor trust with prudent reforms. And economists warn France’s political developments add recession risks there, underscoring Europe’s broad macro headwinds.