Construction costs are currently skyrocketing

Because no state can afford its debt at 3, 4 or 6% anymore.

But not in 2023. States have raised money with long-term loans during the low-interest phase, they will not refinance these this year. Until the interest pressure from new debt becomes painful, there is still water flowing down the Rhine.

I don't believe that the EU can just easily manipulate the interest rates. As long as inflation is high, unfortunately, nothing will change with the interest rates. But the ECB also cannot raise them infinitely. Inflation is expected to remain high in 2023, which means no decrease in interest rates. Above all, interest rates increased even without the decision in 2022; I think the first interest rate hike came in June/July. Interest rates already rose in February because it became apparent from December that inflation and the energy crisis were having an impact. Everything was, of course, then exacerbated by the war.

Hmm why should interest rates fall again? The extreme low interest rate was actually the anomaly.

The current interest rate difference between 5, 10 & 15 years fixed interest period is very small. The banks add a risk buffer to the longer-term loans. If it is low, at least the banks (& reinsurers?) are expecting a long-term declining interest rate environment.

But not in 2023. The states borrowed money with long-term bonds during the low-interest phase; they certainly won't be rolling them over this year. It will be some time before the interest pressure from new debt really hurts.

That's right, many have done that. Austria has even issued 100-year bonds.

Germany, governed by the CDU, was instead greedy and unfortunately heavily relied on very short-term bonds, which is now impacting the budget.

Where I always wonder who actually buys hundred-year bonds with quasi-zero coupons. Due to their maturity, they are so sensitive to interest rate changes that you might as well just go into stocks ;)

Although I always wonder who actually buys hundred-year bonds with quasi-zero coupons. Due to the maturity, they are so sensitive to interest rate changes that you might as well just invest in stocks ;)

I quickly checked. 100-year bonds from Austria in 2017 have a 2.10% coupon and currently yield 2.95%. Can't complain.