La factura de los intereses de la deuda alcanza los dos billones de dólares en todo el mundo

Nearly two billion dollars worldwide is spent annually on the interest of public debt, surpassing defense budgets in the United Kingdom, France, and the United States, as well as in more than a dozen OECD countries. The problem lies in the soaring borrowing costs reaching their highest level in nearly two decades, just as governments are accumulating record levels of debt. The United States' total debt hit a record $40 trillion last month.

This year, OECD countries are expected to take on $18 trillion in debt, another historic high. By 2025, the total cost of servicing sovereign debt worldwide is projected to exceed $2 trillion, equivalent to 3% of global GDP. These massive sovereign debts must be refinanced at increasingly higher interest rates. Global investors are already showing concern, according to Mike Riddell, a manager at Fidelity International.

The summer market crash of bonds has only exacerbated the post-pandemic surge in yields, driven by inflationary crises, increased public borrowing, and the end of central bank quantitative easing programs. The median 10-year bond yield for G7 countries has reached 4% for the first time since 2008, raising concerns about the inflationary impact of the war with Iran and the massive levels of public and private debt.

Some economists argue that the increasing profitability of U.S. bonds is due to optimistic growth expectations, suggesting that interest rates will not need to be as low in the future to support the economy. If a radical shift in growth occurred, it could be a miraculous solution for many countries, as it would increase tax revenues, make debt more manageable, and reduce the trade-off between interest costs and other spending areas.

However, the current landscape is quite different. For large, low-growth economies like the United Kingdom and France, the cost of debt service has already forced them to rethink public finances. In the United Kingdom, a sharp rise in bond yields contributed to the downfall of Prime Minister Liz Truss in 2022 after presenting a budget of tax cuts without fiscal support.

Now, yields are even higher: the United Kingdom's interest cost already reaches £110 billion annually. In France, three prime ministers have been replaced since the 2024 parliamentary elections, partly due to fiscal pressures stemming from debt costs. In both countries and many others worldwide, politicians face a fundamental decision: raise taxes or reduce the size of government to escape the difficult situation they find themselves in.

The magnitude of debt interest also makes it extremely difficult for countries to increase spending on strategic priorities like national defense and energy security. If debt interest were a department, it would be the second largest in Whitehall after healthcare, after defense, the Ministry of Interior and Justice, stated John Healey, the new British Finance Minister. There is nothing progressive about spending one tenth of every pound on debt interest, he added.