Government debt across wealthy nations is on a path to shatter records, with Fitch Ratings projecting the total will reach $75.8 trillion by the close of 2026, driven by persistent budget gaps, global tensions, and mounting pressure on public spending.
The credit rating agency announced Tuesday that debt in developed markets will grow by $4.2 trillion in 2025 alone, pushing the combined total to the equivalent of 104% of gross domestic product. That marks a dramatic increase from $26 trillion — or 68% of GDP — recorded just two decades ago.
Fitch projects that the 10 largest developed economies will account for $69 trillion of that figure, representing 114.5% of their combined GDP. The report underscores the outsized role the United States and other major borrowers play in fueling the global debt buildup.
Among those major economies, the U.S. is forecast to run the biggest government budget deficit this year at 7.8% of GDP, which amounts to roughly $2.5 trillion. France is expected to follow with a deficit of 5% of GDP, then Britain at 4.8%, Germany at 3.7%, and Japan at 3.1%.
Fitch also highlighted how a string of major global crises has contributed to a steady, long-term rise in debt levels. Those events include 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.
Beyond those shocks, governments are also grappling with structural spending pressures tied to national defense, aging populations, climate adaptation, and higher borrowing costs. Fitch estimated that European defense spending could rise by an average of 0.6% of GDP between 2025 and 2029.
The rising debt load is also creating greater risk in financial markets. While 10-year government bond yields in major economies have pulled back somewhat from peaks reached during the U.S.-Iran conflict, they remain approximately 51 basis points above where they stood before that conflict began.
Looking toward the end of the decade, Fitch projects the U.S. debt-to-GDP ratio will climb from roughly 120% in 2026 to 131.5% by 2030. Japan’s ratio is expected to edge slightly lower over that period but will still rank highest in the group at nearly 192%.
The agency noted that artificial intelligence could offer some relief by boosting economic growth and improving debt sustainability, particularly in the United States. However, Fitch also cautioned that AI could lead to higher unemployment, increased social spending, and reduced tax revenues — potentially offsetting those gains.
