Verschuldung: Ifo-Chef Fuest fordert Regierung nach Zinsanstieg zum Handeln auf

Clemens Fuest, president of the Ifo Institute, has called on the German government to take action following a sharp increase in yields for government bonds. Speaking to Reuters on Thursday, the Munich-based economic research institute's leader said the rise in interest rates on government bonds reflects growing concerns about increasing national debt and the looming risk of higher inflation.

Fuest urged Germany to present a convincing, multi-year strategy to reduce government spending and boost economic growth, though investment spending should be given special consideration. Doing so, he argued, would strengthen confidence in Germany's fiscal situation and lower borrowing costs. Government bonds with a ten-year maturity rose to around 3.3 percent this week, the highest level in over 15 years.

Higher yields are bad news for Finance Minister Lars Klingbeil, as they make it more expensive to borrow money and reduce the room for other expenditures such as investments or social benefits. Fuest also called for stronger European incentives to reduce the burden of national debt in the Eurozone, including a stake in investment-backed equity in government bonds held by banks.

The fear of escalating conflict in the Middle East is the trigger for the global yield rise, as investors worry that a prolonged Iran war could push energy prices and inflation higher. This could force the European Central Bank (ECB) to raise interest rates further to combat inflation. In addition, Germany's high national debt, due to massive investments in infrastructure and defense, has been a particular focus this week.

France, in particular, drew attention, with the 30-year government bond temporarily yielding as much as it has not since 2008. In the United States, the world's largest bond market, yields on 30-year papers reached the highest level since 2007 at 5.321 percent. Another factor is the growing competitive pressure from massive bond issuances by major US technology companies vying for investors' money, which is driving yields higher in the US more than anywhere else.