Government Debt Is Now Number One Danger For Your Wealth

The comments from Nigel Green come as the IMF warns that global public debt, at almost 100% of GDP, has surpassed its post-World War II highs, and that a sharp rise in borrowing costs could hit asset values worldwide.

Global public debt reached 93.9% of GDP last year and is on course to hit 100% by 2029. Government interest bills have jumped from 2% of global GDP to nearly 3% in just four years.

The IMF warns the impact of a bond market shock could be severe, with higher yields marking down asset values, including AI-related stocks, and eroding the value of government bonds posted as collateral.

Britain is in the firing line. Yields on 30-year gilts hit 6.036% last week, their highest since January 1998, making the UK the first G7 economy to pay that much since the height of the euro crisis in 2012. Ten-year yields are close to their highest since 2007.

Chancellor John Healey delivers his first budget on October 28.

France is in even deeper trouble. Its 10-year borrowing costs hit 4.92%, the highest since 2002, and the premium over Germany widened to 152 basis points, the most since 2011. France now pays more to borrow than Italy or Greece, with debt heading for 121.7% of GDP and annual interest costs approaching EUR 91 billion.

The pressure is global. The US is running a deficit of 7% to 8% of GDP with no plan to rein it in, and the IMF projects its debt will reach 142.1% of GDP by 2031.

The 10-year Treasury yield has hit 5.34%, the highest since 2002, after its biggest quarterly surge since 1994.

Japan's 30-year yield has hit a record 4.24%, and China's debt is forecast to reach 126.8% of GDP.

The fallout could reach every corner of the market. US stocks are trading near record highs, powered by a handful of technology giants whose valuations depend on profits expected years into the future.

The coming weeks bring a series of major tests, including the UK budget, the Federal Reserve's next rate decision, France's budget battle in a fragmented parliament and a run of long-dated bond auctions in the US, UK and Japan.

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