World Business Report What does the UK budget show us about global debt challenges?
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Nov 26, 2025 David Aikman, Director at NIESR, and Paola Subacchi, Chair in sovereign debt at Sciences Po, discuss the UK budget's implications on global debt challenges. Aikman places the UK’s rising debt within a G7 context, emphasizing shifting fiscal priorities amidst higher interest rates. Subacchi contrasts productive borrowing with reckless spending, calling for policy reforms. They also explore how the post-Covid landscape complicates debt management for advanced economies, revealing the complex interplay between fiscal decisions and economic stability.
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Debt Has Become A Central Economic Constraint
- Major economies now face structurally higher debt burdens after COVID and other shocks, raising debt-to-GDP close to or above 100% in many cases.
- Rising interest rates have changed the calculus, making past deficits much more costly to service and limiting fiscal flexibility.
Aging And Spending Raise Debt Risks
- Advanced economies aren't immune: aging populations and higher spending mean even G7 countries face sustainability questions.
- Paola Subacchi warns that higher interest costs plus demographic pressure challenge governments' ability to manage debt.
Few Easy Paths Out Of High Debt
- Historical choices and shocks—like Covid support and long-term welfare commitments—drove debt up rapidly.
- Without stronger growth, options narrow to tax rises, spending cuts, inflation, or other undesirable outcomes.