Developed-Market Government Debt Projected to Hit $75.8 Trillion by End-2026

On Tuesday, July 21, Fitch Ratings forecast that total government debt across the 10 largest developed economies will reach a record $75.8 trillion by the close of 2026. The agency said this amount represents roughly 104 % of combined gross domestic product (GDP), a sharp rise from the $26 trillion—about 68 % of GDP—recorded two decades earlier.

Reuters

Fitch identified persistent budget deficits, geopolitical tensions, and expanding spending demands as the primary forces behind the debt surge. The agency listed a series of shocks that have “ratcheted up” debt levels, including the global financial crisis, the euro-zone debt crisis, the COVID-19 pandemic, Russia’s invasion of Ukraine, and the ongoing U.S.–Iran conflict. Structural pressures such as higher defence spending, ageing populations, climate-change adaptation, and rising interest costs are also contributing to the fiscal strain.

Reuters

According to Fitch, the United States is projected to post the largest budget deficit among major developed economies in 2026—7.8 % of GDP, or roughly $2.5 trillion. France is expected to run a deficit of 5 % of GDP, Britain 4.8 %, Germany 3.7 %, and Japan 3.1 %. Collectively, the ten largest economies would account for $69 trillion of the total debt, equivalent to 114.5 % of their combined GDP.

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Higher debt levels are raising market risks, Fitch noted. Although 10-year government bond yields in major markets have eased slightly since peaking during the U.S.–Iran conflict, they remain about 51 basis points above pre-war levels. The agency projected that the U.S. debt-to-GDP ratio could climb to 131.5 % by 2030, up from around 120 % in 2026, while Japan’s ratio is expected to stay near 192 %—the highest among the group. Fitch also suggested that artificial intelligence could boost growth and improve debt sustainability, particularly in the United States, but warned that it might also generate higher unemployment, larger social outlays, and lower tax revenues.

Reuters