Global debt increased by $10 trillion in the first half of 2026 alone, pushing the total above $365 trillion. At the same time, major economies are facing higher borrowing costs, making it increasingly expensive for governments to service their accumulated debt.
According to the Institute of International Finance (IIF), government debt continues to rise as yields on medium- and long-term bonds increase. In the U.S., Japan, France and the U.K., government bond yields have climbed to their highest levels in more than a decade, CNBC reports.
Higher yields mean governments have to pay more to borrow. The IIF points to elevated interest rates, pressure from energy costs, weak economic growth and high government spending as key factors behind the trend.
The organization highlighted the U.S., Japan, France and the U.K. in particular. These countries are facing both large budget deficits and rising interest expenses — problems that were once more commonly associated with heavily indebted emerging economies.
Debt servicing is taking up more money
Last year, advanced economies spent more than $3.3 trillion on interest payments on government bonds traded in international markets.
For comparison, global spending on artificial intelligence was around $2.6 trillion, defense spending totaled $3.1 trillion, and clean energy investment reached $2.3 trillion. That means debt servicing already costs advanced economies more than each of these categories individually.
The IIF warns that the burden could continue to increase as benchmark interest rates rise. Healthcare and public pension spending are adding further pressure.
The OECD also urged governments in its economic outlook to better control spending, reallocate public funds, improve public-sector efficiency and strengthen revenues.
International Monetary Fund Managing Director Kristalina Georgieva told the BBC that repeated shocks are pushing global debt higher “like a staircase.” She said countries need to reduce debt burdens while keeping inflation under control.
Why global debt matters
Rising global debt matters not only to governments. The more countries spend on interest payments, the less money they have for infrastructure, healthcare, education and economic support. If debt servicing becomes too expensive, governments may raise taxes, cut spending or borrow even more, putting additional pressure on public finances.
High debt also matters to investors. It can affect interest rates, bond yields, currency exchange rates and borrowing costs for businesses. If markets begin to doubt a government’s ability to keep debt under control, investors may demand higher yields, making credit more expensive across the economy and putting pressure on stocks and other risk assets.
As a reminder, the eurozone economy is gaining momentum as growth in the services sector accelerates.
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