The IMF warns that global public debt will reach $100 TRILLION this year and that Britain must act quickly

Total public debt worldwide will surpass $100 trillion (£77 trillion) for the first time by the end of this year, according to a grim forecast from the International Monetary Fund (IMF).

As Rachel Reeves struggles to make her budget numbers add up, the global watchdog said governments must act now to prevent debt from spiraling further out of control or risk having to take even more painful measures in the future.

Its projections see global debt reaching 93 percent of gross domestic product (GDP) by the end of this year and 100 percent by 2030.

But it highlighted the risk that debt burdens could rise even more rapidly as governments face pressure to increase spending due to aging populations, climate change and rising defense budgets amid rising tensions. global.

In a “severely adverse scenario,” it could reach 115 percent within three years, the IMF said.

Its report says debt has risen most rapidly in large countries like the UK since the pandemic, when billions were wasted saving lives and protecting jobs.

The IMF warned that delaying any measures to address the debt would be costly and would mean that the “correction” required (through tax increases or spending cuts) would be even greater.

And he also made it clear that there was a big risk if the problem was not addressed in time.

If nervous bond investors panic, that would mean countries will find it difficult to borrow money in the event of a crisis that requires more spending.

“Country experiences suggest that high debt and the lack of credible plans to address it can trigger adverse market reactions and leave little fiscal room for maneuver in the face of adverse shocks,” the report says.

And the IMF chastised indebted countries for failing to cope with the colossal scale of the debt.

“If the public debt is higher than it appears, current fiscal efforts are probably less than necessary,” he said. The report comes as speculation grows that Reeves will tweak rules to reduce debt in his debut budget later this month.

That could unlock tens of billions of pounds more in loans to pay for much-needed investments. But some fear that by going too far, the Chancellor risks incurring the ire of bond markets.

British ten-year bond yields (the return investors expect when lending to the government) have already risen to pre-election levels.

Elsewhere, France has fallen out of favor with bond investors amid its chaotic political situation, with a minority administration appointed by President Emmanuel Macron struggling to assert its authority over a parliament dominated by the far right and the far right. left.

That has led to French bond yields exceeding those issued by Spain, reversing the long-held view that Paris’ public finances were a much safer bet than Madrid’s.

Last month, the government warned that its 2024 deficit – the gap between outgoing spending and incoming revenue – risked exceeding 6 per cent of GDP. That compares with a previous target of 5.1 percent.

In the United Kingdom, debt is around 100 percent of GDP. This summer it reached £2.77 billion, according to official data. In France it has risen to 112 per cent or £2.69 billion.

In the case of the United States, it is expected to exceed 120 percent of GDP. Recent figures showed it had reached a staggering £27 billion.

An independent forecast suggests both candidates in next month’s presidential election will increase debt, with Donald Trump adding £5.7 trillion over ten years and Kamala Harris £2.7 trillion.