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Western governments are borrowing at record highs – does it matter?

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In its latest report on global debt, the Organisation for Economic Co-operation and Development has projected a surge in government borrowing, reaching an unprecedented $15.8 trillion this year.

The Paris-based research body revealed that gross borrowing, encompassing both refinancing of maturing bonds and new issuances, climbed from $12.1 trillion in 2022 to $14.1 trillion in 2023.

This substantial increase in borrowing is attributed to the ongoing economic repercussions of the COVID-19 pandemic, which prompted governments worldwide to embark on massive borrowing to support households and businesses.

The OECD noted that the total borrowing is expected to surpass the previous peak of $15.4 trillion recorded in 2020.

A significant portion of this year’s borrowing, approximately $12.6 trillion, will be directed towards refinancing maturing bonds issued during the pandemic.

However, the surge in inflation post-pandemic has led to higher interest rates, causing the average cost of new borrowing for governments to spike to 4% in 2023 from 1% in 2021.

Economic output

Consequently, the cost of interest payments for governments has escalated, accounting for 2.9% of annual economic output in 2023 compared to 2.3% in 2021.

The OECD warned that this trend is expected to continue, projecting a further half-percentage-point increase in interest payment costs by 2026.

Moreover, governments are anticipated to encounter challenges in finding buyers for their debt as central banks begin to reduce their holdings of government bonds, which were amassed in efforts to stimulate growth and inflation following the global financial crisis.

With central banks gradually withdrawing from the bond market, the OECD highlighted the need for governments to attract more price-sensitive investors, such as non-bank financial sectors and households.

The report supported that central banks in OECD member countries currently hold government bonds equivalent to 30% of annual economic output, mirroring the surge in total government debt since the financial crisis.

The OECD anticipates a record level of net bond supply to be absorbed by the broader market as central banks embark on quantitative tightening.

Ahron Young is an award winning journalist who has covered major news events around the world. Ahron is the Managing Editor and Founder of TICKER NEWS.

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Boeing face delivery delays following guilty criminal charge plea

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Boeing’s deliveries are down after months of controversy, is it because they can’t make the planes, or because airlines right now don’t want them?

Boeing has agreed to plead guilty to a charge of conspiracy to defraud the United States in connection with the investigation into two fatal crashes involving its 737 MAX aircraft.

Boeing reported a significant 27% decrease in deliveries for June compared to the same month last year, possibly attributing the decrease to the companies ongoing controversies.

Aviation expert Geoffrey Thomas joins to discuss. #featured

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Blockchain sparks a transformative influence in Australia

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Professor unveils blockchain’s role in transforming the economy and innovative projects taking place at RMIT University.

Crypto Corner explores the latest market movements, expert insights and the influence of macroeconomic factors on the crypto industry.

Crypto Corner is hosted by Caroline Bowler, CEO of BTC Markets.

In this episode, BTC Markets CEO Caroline Bowler interviews Professor Chris Berg, Director of RMIT Digital3 and Co-Founder of the Blockchain Innovation Hub at RMIT University. They discuss RMIT’s cutting-edge projects and the transformative impact of blockchain technology in Australia.

Professor Berg shares insights into RMIT’s Digital3 philosophy, which combines research, innovation, and collaboration to drive the digital economy. Learn about groundbreaking initiatives in blockchain, cyber security, and AI, and how these disruptive technologies are reshaping business, government, and society.

Discover how RMIT is leading the charge in rethinking and regenerating the way we work through world-class research and tailored education, offering a glimpse into the future of technology and its potential to benefit both the economy and society. #crypto corner

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From $25K to $1.5M in real estate: expert unveils game-changing strategy for investors

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Empower your property investing with these key tips

Wyld Money dives into the world of financial freedom. Whether you’re a seasoned investor or just getting started, join us for actionable tips and tricks to unlock your earning potential, and retire on your own terms.

In this episode, Mark is joined by Dean Fraser, Founder and CEO of BrickFloor. #trending #wyld money

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