LONDON, Oct 16 (Reuters) – Record debts, high interest rates, the costs of climate change, health and pension spending as populations age and fractious politics are stoking fears of a financial market crisis in big developed economies.
A surge in government borrowing costs has put high debt in the spotlight, with investors demanding increased compensation to hold long-term bonds and policymakers urging caution on public finances.
Over 80% of the $10 trillion rise in global debt in the first half to a record $307 trillion came from developed economies, the Institute of International Finance says.
The United States, where brinkmanship around a debt limit brought it close to a default, Italy and Britain are of most concern, more than 20 prominent economists, former policymakers and big investors told Reuters.
They do not expect a developed economy to struggle paying debt, but say governments must deliver credible fiscal plans, raise taxes and boost growth to keep finances manageable. Heightened geopolitical tensions add to costs.