Photo: Collected
Total global debt — government, household and corporate combined — rose by another $10 trillion in the first six months of 2026 to more than $364-365 trillion. The world economy has never before carried such a debt burden. How deep the crisis runs becomes clear when it is compared with the total monetary value of all goods and services produced worldwide in a year, or global gross domestic product (GDP). This debt is not only straining governments’ finances; through higher interest payments, a rising cost of living and squeezed spending on public services, its heat is also reaching ordinary people’s lives.
By the latest IIF estimate, the world’s total GDP is now just over $118 trillion. At the end of June 2026, the global debt-to-GDP ratio stood at around 310 per cent; that is, total debt was about 3.1 times the monetary value of all goods and services produced in the world in a year.
In recent weeks, millions of people have taken to the streets in various European countries to protest against the rising cost of living, low wages, unaffordable house prices and inadequate funding for education. While some protests in France, Belgium, Italy and Portugal turned into clashes, looting and arson, in many places they remained peaceful.
France is at the centre of this unrest. The country’s interior ministry said more than 550,000 people joined protests across the country on Saturday. The protests came amid weeks of student agitation over problems in the education sector and the cost of living.
The protests have also brought the growing financial crisis in European countries to the fore. After years of heavy borrowing, many countries are now carrying a heavy debt burden, and the cost of servicing that debt is also rising. France’s borrowing costs are at their highest since 2002. The more the government spends on interest payments, the less money there is for public welfare sectors such as schools, hospitals and pensions.
Qatar-based news outlet Al Jazeera, in an analytical report, has set out how governments borrow, where France stands among the most indebted countries, and how much the world is spending on debt interest.
How governments borrow
Rather than borrowing directly from banks, governments usually raise money by selling government bonds. In return for buying bonds, investors receive interest, with a promise that the principal will be repaid at the end of a set term. For example, the government repays the principal of a 10-year bond after 10 years. The bond’s yield, or rate of return, shows how much profit an investor makes by lending to the government. It is also one of the most important measures of how much confidence the market has in a country’s debt management and financial stability.
Suppose an investor buys a 10-year government bond for 100 euros. If the interest rate is 2.5 per cent, they will receive 2.50 euros a year, or a total of 25 euros in interest over 10 years; if the rate is 5 per cent, they will receive 5 euros a year, or 50 euros in total over 10 years. In both cases they get back the original 100 euros at the end of the term.
When government bond prices fall, their yields usually rise, so the government has to pay more interest to take on new debt. Just as a rise in mortgage interest pushes up a family’s monthly costs and leaves less money for other things, a rise in interest on government debt reduces the government’s ability to spend on public services and infrastructure.
Interest on 10-year government debt in Europe’s large economies has not risen close to 5 per cent since the early 2000s, when the euro had only just been introduced. During the eurozone debt crisis of 2010 to 2012, countries in trouble such as Greece, Italy and Spain had to borrow at 5 per cent or more. After rates crossed 7 per cent, Ireland and Portugal had to turn to financial bailout packages.
The interest rate on France’s 10-year government debt is now about 5 per cent, compared with 3.41 per cent for Germany. The widening gap between the two countries’ rates means investors are demanding a higher return for lending to France than to Germany.
Placing the 10-year government borrowing rates of eurozone countries and the UK side by side shows that France is now paying more than even Italy and Greece, the two countries hit hardest by the eurozone debt crisis. Among the countries mentioned in the report, only the UK, which is not a member of the eurozone, is paying more than France.
Who owes how much
In terms of total government debt, the United States is at the top of the world. Its government debt is $41.4 trillion, equal to 127 per cent of its gross domestic product (GDP). GDP is the total monetary value of all final goods and services produced in a country in a given period.
Because it can borrow in the dollar, the world’s main reserve currency, it is easy for the US to raise money from global investors. Worldwide demand for the dollar also sustains demand for the country’s government debt. But this advantage does not make America’s capacity to borrow limitless.
China comes after the US, with government debt of $22.5 trillion, or 104 per cent of GDP. Japan’s government debt is $8.7 trillion, and it has the highest debt-to-GDP ratio among the major economies — 199 per cent. The UK’s government debt is $4.4 trillion, or 102 per cent of GDP. With $4.2 trillion in government debt, France is the world’s fifth most indebted country; its debt-to-GDP ratio is 118.5 per cent.
In absolute terms, France’s government debt is larger than Italy’s $3.7 trillion. But relative to the size of its economy, Italy’s burden is heavier; its debt-to-GDP ratio is 138 per cent. Germany’s government debt is $3.5 trillion, or 65 per cent of GDP.
The International Monetary Fund (IMF) forecasts that France’s government debt could reach 121.8 per cent of GDP by 2030. That could make efforts to keep the country’s public finances sustainable in the long run even harder.
Not just government debt but household and corporate debt is also becoming a heavy burden on the world economy. According to IIF data, total global debt, including that of governments, households and businesses, rose by $10 trillion in the first six months of 2026 to more than $365 trillion. Per head, that works out to about $44,000 for every person in the world. A large part of this increase came from emerging market countries.
Over the past year, advanced economies spent more than $3.3 trillion just on interest on government bonds. According to the report’s figures, this is more than each of the world’s total military spending ($3.1 trillion), investment in artificial intelligence ($2.6 trillion) and spending on clean energy ($2.3 trillion).
As interest payments rise, spending on public services may be cut. To manage deficits, governments may have to raise taxes or cut spending, which risks hitting education, healthcare, pensions and various other public welfare services.
When the government’s borrowing costs rise, interest on home loans, car loans and credit cards may rise too. Then the cost of repaying debt goes up for families and individuals, leaving them less able to spend on other essentials.
Although Europe’s recent protests have immediate causes such as the cost of living, low wages and the housing crisis, rising government debt and interest costs are making the situation more complicated. Balancing debt pressure on the one hand against the demand for money for public services such as education, health and pensions on the other is now a major challenge for many European governments.
Background
According to a Stock Analysis report of 24 September, the Institute of International Finance (IIF) published these global debt figures on 23 September; global debt has risen for six consecutive quarters.
By the numbers
The same report said global debt rose by $21 trillion over the same period last year; this time it rose by $10 trillion in the first six months.
By the IIF’s estimate, emerging market debt rose by $6.5 trillion during this period to more than $110 trillion; of this, China’s debt rose by $4.8 trillion.
At a glance
The IIF, or Institute of International Finance, is an association of the world’s financial institutions that regularly publishes global debt monitor reports; the Stock Analysis report cites this report as its source.
Background source: Stock Analysis, 24 September 2026
