Here's Why Here's Why Debt Is a Driving Political Force
Oct 10, 2025
In this discussion, Stephanie Flanders, Bloomberg's Head of Economics and Government, delves into the rising national debts that are reshaping global politics. She explains how post-crisis debt and higher interest rates are straining budgets in countries like the UK and France. Stephanie highlights the unique challenges each country faces, including the UK's refinancing pressures and France's political uncertainties. She also evaluates the U.S. deficit in light of its reserve-currency status and emphasizes the difficulty politicians have in implementing long-term fiscal reforms.
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Debt Jumped Then Became Painful
- Debt in advanced economies roughly doubled after the global financial crisis and COVID stimulus.
- Rising interest rates have turned a latent debt stock into an active fiscal problem.
Low Rates Hid Debt Risks
- Low interest rates masked the cost of high debt for years, letting governments ignore the stock of debt.
- That cover has disappeared as rates rose, exposing fiscal vulnerabilities.
Same Pressures, Different Weak Spots
- Countries share structural pressures like aging and higher interest costs, but differ in specifics such as debt maturity.
- Those specifics change whether markets worry about liquidity or the long-term stock of debt.