Global debt pile reaches war-time levels
Global governments' fiscal support measures has left us with “war-time era” debt levels. A reckoning is inevitable.

The world’s governments “have rolled out $16trn of fiscal measures to prevent economic collapse during the pandemic”, says Enda Curran on Bloomberg. That has left us with “war-time era” debt levels. The UK’s government debt-to-GDP ratio is expected to hit 113% in 2026, up from 85.2% pre-pandemic, one of the biggest increases among all advanced economies. Ultra-low interest rates on government bonds – the UK’s ten-year gilt currently yields 0.623% – are keeping these debt levels manageable for now, says James McCormack of credit rating agency Fitch. Yet in the longer-term a “fiscal adjustment” (spending cuts and higher taxes) will probably be needed to get global government finances back on track.
Climate change will worsen debt dynamics over the coming decades, say Dhara Ranasinghe and Karin Strohecker on Reuters. “While developing countries are inherently more vulnerable to rising sea levels and drought, richer ones will not escape.” A report by index provider FTSE Russell finds that “Malaysia, South Africa, Mexico and even... Italy may default on debt by 2050”. Many nations could also be heading for climate-induced credit downgrades, leading to higher borrowing costs and more onerous national debts.
As during the 1970s, “the economy looks shaky and society is becoming more fractious”, says Liam Halligan in The Daily Telegraph. “The emerging parallels between contemporary British trends and those weird, dysfunctional years… are stark.” Even the Afghan debacle is reminiscent of “America’s 1975 retreat from Saigon”. By 1976 “a near-bankrupt Britain” was forced to beg the International Monetary Fund for a bailout. This time too, “after years of high borrowing and mass money-printing… a fiscal reckoning... seems inevitable”
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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
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