Advanced economies have long been treated as the world’s safest borrowers. Their debt costs now tell a less comfortable story. Interest payments on internationally traded government bonds by advanced economies exceeded $3.3 trillion last year, more than global spending on artificial intelligence, defence or clean energy as separate categories.
Total global sovereign and private debt surpassed $365 trillion in the first half of 2026, after climbing by $10 trillion. The increase has come as governments have borrowed through repeated economic disruptions and then faced higher costs when refinancing that debt.
The comparison with global investment is stark. Spending on artificial intelligence was $2.6 trillion, while defence spending was $3.1 trillion and clean-energy spending was $2.3 trillion. Interest payments are therefore absorbing resources on a scale greater than each of those areas individually.
The Organisation for Economic Co-operation and Development said long-term sovereign bond yields in most major advanced economies were at their highest levels in 15 years or more. Higher yields raise the cost of issuing new debt and rolling over existing borrowing, placing further pressure on public finances.
In the US, the 10-year Treasury yield rose to 4.81%. Germany’s 10-year bund yield reached 3.375%, its highest since 2011. The UK’s 10-year gilt yield extended to 5.25%.
These movements matter because governments already face large deficits while meeting rising interest expenses. The US national debt has surpassed $40 trillion, representing more than 120% of annual economic output.
The Institute of International Finance and the OECD issued warnings on Wednesday about the strain created by rising debt and borrowing costs. The Institute of International Finance warned of a “vicious cycle”, in which greater debt and higher interest payments can reinforce each other.
Kristalina Georgieva, the managing director of the International Monetary Fund, said repeated economic disruptions were “pushing debt levels up like a staircase not to heaven”. Her description captured the central concern: borrowing has helped governments respond to shocks, while the accumulated debt is making future responses more expensive.
The US, Japan, France and the UK are now facing pressures more commonly associated with emerging markets, including the need to manage high debt-servicing costs alongside fiscal constraints. Advanced economies retain broad access to bond markets, but their borrowing costs have risen as investors demand higher yields on long-term government debt.
The immediate policy problem is political as well as financial. Governments are described as lacking the political will to tackle the debt situation, even as deficits and interest costs narrow their room for manoeuvre. The brief does not identify specific measures under consideration by major governments.
It is also unclear when the cycle might stabilise or reverse. There are no projections here for future interest rates or debt levels, nor a country-by-country breakdown of the $365 trillion total. The relative share of corporate and household debt within that figure is also unknown.
For now, the figures show a broad shift in the fiscal position of advanced economies. Debt is continuing to rise, yields remain elevated and interest costs are becoming a larger call on public resources.
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