The cost of government debt service amounts to over 2 trillion dollars, affecting their spending capacity. Countries like the United Kingdom and France already allocate more to interest than to defence.
The global public debt service has reached a record figure of 2 trillion dollars, a cost that consumes a large part of tax revenue, according to expansion.com. This increase occurs in a context where several governments, including those of the United States, France, and the United Kingdom, spend more on interest than on defence.
Interest rates have reached their highest level in nearly two decades, just as debt levels are at historic highs. In 2025, the cost of debt service in OECD countries could represent 3% of GDP. For this year, it is estimated that OECD countries will incur a total debt of 18 trillion dollars.
The situation is further complicated by rising bond yields, which have led investors to demand higher interest rates. The average yield on 10-year bonds from G7 countries has reached 4%, a figure not seen since 2008. This increase is partly due to growth expectations and a decrease in bond purchases by central banks.
In the United Kingdom, the cost of interest already amounts to 110 billion pounds annually, prompting a rethink of public finance management. In France, the tax pressure generated by the rising cost of debt has contributed to political instability, with three prime ministers in less than two years.
Governments face a difficult decision: raise taxes or reduce the size of the state. As John Healey, the British Chancellor of the Exchequer, noted, “if debt interest were a ministry, it would be the second largest in Whitehall.” This scenario complicates the increase in spending in priority areas such as defence and energy security.
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