G7 Debt Levels Show No Sign Of Falling As UK Debt Projected To Soar By 2070s

During the financial crisis of 2009, economic research briefed global policymakers on the dangers of excessive public debt. The book “This Time is Different” by Kenneth Rogoff and Carmen Reinhart asserted that countries with a debt to GDP ratio above 90 per cent suffered prolonged stagnation. Their conclusions quickly entered policy circles, supporting fiscal tightening as public debt in nations such as the UK, United States, and within the eurozone approached this apparent threshold.

In practice, the drastic impact described never fully materialised. The influential study was later discredited by researchers who uncovered miscalculations and data exclusions, which, once addressed, revealed that high debt countries maintained average growth of 2.2 per cent per year rather than sliding into recession. The supposed 90 per cent debt tipping point proved illusory. Nevertheless, the debate shaped economic policy in the UK and abroad for years following the crisis, particularly under Conservative leadership.

As of 2025, the claimed warning threshold has been surpassed by every G7 country except Germany. Since 2009, average G7 public debt has risen from just under 95 per cent of GDP to 147 per cent, according to IMF data. Japan stands at nearly 230 per cent, the United States approaches 120 per cent, and UK debt has hovered around 100 per cent of GDP for several years. According to Oxford Economics, UK public debt has tripled in two decades, now approaching 3 trillion pounds, growing faster than any other advanced economy.

Governments worldwide have accumulated further debt in response to the pandemic and the global energy crisis. Additional defence and climate obligations continue to drive public borrowing. The Institute for International Finance calculates that global public debt increased by 21 trillion US dollars in the first half of this year alone, reaching a record 338 trillion dollars amid high interest rates, which in turn worsen affordability and sustainability concerns.

No major debt crisis akin to the eurozone turmoil in the 2010s has yet occurred in the industrialised world. Economists cite expectations that central banks will always step in to stabilise markets, and that new technologies might fuel productivity strong enough to offset debt risks. However, the UK finds itself more vulnerable than peers; since the 2022 mini-budget, government borrowing costs have been closely scrutinised by foreign bondholders, and the Treasury is under pressure to demonstrate ongoing fiscal responsibility.

The Office for Budget Responsibility forecasts that UK debt could reach 270 per cent of GDP by the 2070s, primarily due to an ageing population increasing demand for health and social care, and additional commitments across defence and climate strategy. The scale of the debt is already forcing the government into difficult decisions, including measures to achieve a primary budget surplus for the first time this century. Despite plans for reduced spending, analysts question whether this will be sufficient to stabilise the trajectory of UK debt as fiscal policy in other developed nations remains more expansionary.