The results are quite surprising: the overall benefit of low interest rates is neither equally distributed nor follows the North-South divide. Among the major beneficiaries are not only Spain (+16.5% of GDP or EUR 181bn) and Portugal (+10.4% or EUR 19bn) – as expected – but also the Netherlands (+12.7% or EUR 87bn) and, to a lesser extent, Italy (+5.9% or EUR 99bn) and Germany (+3.9% or EUR 114bn). On the other hand, Finland (-6.4% or EUR -13bn), Belgium (-3.0% or EUR -15bn) and France (-2.9% or EUR -63bn) are unexpectedly on the losing side.

Furthermore, the development of net interest income varies also greatly from sector to sector. Three observations are particularly striking:

Firstly, only non-financial companies have consistently benefited from the low interest rate environment. Highly indebted companies in Southern Europe saw particularly large positive effects, ranging from 13.5% of GDP in Portugal (EUR 25bn) and 18% in Italy (EUR 299bn) to 34.5% in Spain (EUR 378bn).

Secondly, not all governments were able to benefit from the fall in interest rates. Rising debt levels in some countries have eaten up the savings from lower interest rates. Germany has improved its (negative) net interest income the most (+6% of GDP or EUR 184bn), as the decline in interest rates has been accompanied by debt restraint. On the other end of the spectrum sits Spain: Its public net interest income deteriorated by 12.7% (EUR -138bn) as public debt increased threefold.

Thirdly, the situation of private households is very heterogeneous, driven by behavioral changes, the proportion of savings and debt and the pass-through of interest rate cuts on the credit side. All these factors led to German households suffering from low interest rates – to the tune of 4.2% of GDP (EUR -123bn) – while Spanish (+14.1% or EUR 153bn) and Portuguese households (+20% or EUR 36bn) benefited the most.

All results can be replicated with the “Allianz Net Interest Income Calculator”, which measures the net interest income of the four main actors (government, households, non-financial companies and financial corporations) in the individual euro countries since 2002.