In 2025, OECD member nations collectively spent over $2 trillion on debt interest payments, amounting to approximately 3% of their combined GDP. Borrowing costs for these countries have reached their highest levels in nearly two decades, with G7 10-year government bond yields averaging around 4%.
The United States reported a record public debt of $40 trillion in 2025, with net interest payments now surpassing the nation's defense budget. Similarly, the UK faces annual interest costs of roughly £110 billion, which are projected to reach nearly 4% of GDP by 2030-31, potentially becoming the second-largest government spending category.
France is also experiencing fiscal pressure, as its debt service costs now exceed its defense budget. The country has seen significant volatility in its 10-year borrowing costs following the 2024 elections. Globally, public debt reached nearly 94% of world GDP in 2025, according to IMF data.
The current situation stems from the rollover of pandemic-era debt at higher interest rates. OECD governments are expected to borrow a record $18 trillion in 2026. This high volume of new issuance locks in elevated rates, further limiting funds available for infrastructure, social programs, and military modernization.
