Global sovereign debt is expected to climb by 9.5% to a record $71.6 trillion U.S. this year, according to a new report.
In its second annual Sovereign Debt Index, British asset manager Janus Henderson Group (JHG) projected a 9.5% rise in global government debt, driven primarily by the U.S., Japan and China, but with the vast majority of countries expected to increase borrowing.
Global government debt jumped 7.8% in 2021 to $65.4 trillion U.S. as every country assessed saw borrowing increase, while debt servicing costs dropped to a record low of $1.01 trillion U.S. due to an effective interest rate averaging just 1.6%, according to Janus Henderson.
However, debt servicing costs are set to rise significantly in 2022, climbing around 14.5% on a constant-currency basis to $1.16 trillion U.S.
The United Kingdom is expected to feel the sharpest effect on the back of rising interest rates and the impact of surging inflation, along with the costs associated with unwinding the Bank of England’s quantitative easing program.
Janus Henderson noted that divergence is now emerging as a key theme, as central banks in the U.S., U.K., Europe, Canada and Australia look to tighten the policy strings to contain inflation, while China continues to try to stimulate the economy with a more accommodative policy stance.
