World’s governments face $2T debt-servicing burden as borrowing costs hit two-decade highs

The world’s richest governments are now spending more than $2 trillion a year just to keep up with interest payments on their debt. That’s not building roads, funding hospitals, or equipping militaries. OECD member countries collectively hit that milestone in 2025, with debt-servicing costs consuming approximately 3% of the group’s GDP. Borrowing costs have climbed to their highest levels in nearly two decades, and the political consequences are starting to bite. The numbers behind the squeeze The United States sits at the center of this story. US government debt reached a record $40 trillion in 2025. Net interest payments on that debt now exceed what America spends on defense. The UK isn’t faring much better. Annual debt interest payments clock in at roughly £110 billion, and projections suggest those costs could reach nearly 4% of GDP by 2030-31. That would represent a doubling from pre-pandemic levels. UK Chancellor John Healey noted that debt interest is on track to become the second-largest spending category in Whitehall, trailing only health and surpassing defense. France presents its own cautionary tale. The country’s annual debt service costs now exceed its defense budget. ...