Ahmed Imtiaz is a qualified barrister working as a legal counsel for a global insights platform in London. He was a candidate for Westminster Council in the May local elections.
Following the financial crisis, lending cash to developed countries has generally been considered a safe bet.
This trend is changing quickly, with investors demanding higher returns on the money they are lending. The average 10-year benchmark yield of G7 countries has hit 4 percent, the first time this has happened since 2008. Britain became the first G7 country to see borrowing costs hit the 6 per cent mark, a level not seen since 1998.
There are three main factors fueling the higher premium demanded by investors across the world. First, there is an expectation that inflation will remain higher for longer. Investors anticipate that, due to the Iran war, which pushed energy prices very high and disrupted the global energy supply chain, higher inflation is here to stay. The European Central Bank has increased interest rates twice since the Iran war, with rates climbing from 2 per cent to 2.5 per cent. The Federal Reserve in the United States, for the first time since 2023, hiked interest rates. The Bank of England has not yet raised rates, but there is a clear understanding in the financial markets that the central banks, including the Bank of England, will increase rates if energy prices remain elevated.
The second cause of elevated bond yields is the oversupply of bond issuance. Beyond unrealistic public spending by many major economies worldwide, which is prompting them to borrow more, large US tech firms are borrowing at an unprecedented rate, creating headwinds for US Treasuries, UK gilts, and other major markets. These tech firms are borrowing huge amounts of capital, and they enjoy very high bond ratings thanks to their healthy balance sheets. According to an estimate by Goldman Sachs, investors provided about 500 billion USD of financing to tech-related groups so far this year. As per this estimate, there will be 1 trillion USD of new bond issuance by US tech giants in the next few years. This oversupply of bond issuance by large tech firms, which are more than certain to honour their commitments, is allowing investors to demand higher yields for government-related debt.
The third and most important factor is the unsustainable level of debt globally. According to a paper by the Institute for International Finance, gross global debt has reached 311 per cent of global GDP at the end of the first half of 2026. The United States has seen its government debt climb to a record 40 trillion USD. Here in the UK, debt interest payments now account for £8 of every £100 the government spends. The combined interest payment bill on the debt for OECD countries exceeded 2 trillion USD in 2025. It is worth pointing out that our debt crisis is more severe than that of the US; we do not have artificial intelligence-led growth to offset it. According to the Federal Reserve Bank of Atlanta, the US is expected to grow at 5.1 per cent in the third quarter. A dangerous consequence of the debt crisis can also be seen in France, where the Prime Minister, Sebastian Lecornu, rightly wants to cut public spending, but there have been very violent protests lately over proposed cuts. France’s finance ministry expects public debt to hit a record 119.3 per cent of GDP.
The budget deficit in France is running at 5.4 per cent of GDP, almost double the limit set by the European Union, which is 3 per cent .
Many incumbents and challengers alike across the globe are totally overlooking the signals from the bond market. The populist right and the populist left-wing parties are solely focused on their political ambitions, ignoring the financial implications of their actions. Donald Trump recently promised every American 5,000 USD if Republicans win the midterms in November. It is disappointing, to say the least, to see such a handout promise being made by a Republican president. Jean-Luc Melenchon, a leader of the left-wing party in France and a presidential hopeful, has bizarrely proposed that the Bank of France should write off the debt that the government has obtained from the bank, which is roughly 18% of France’s total debt. In September, Brazilian President Lula increased welfare handouts as the nation approached the first round of elections; this ultimately proved futile as he lost the first round to a market-friendly Flavio Bolsonaro, son of former president Jair Bolsonaro. It is quite evident that the economic approach of populist leaders, regardless of their politics, is strikingly similar: win the next ballot, and worry about the financial consequences later.
A similar facetious approach can be seen here in the UK. At the Labour Party conference in Liverpool, Prime Minister Andy Burnham promised the creation of a national care service, which will cost around 80 billion GBP; there was no indication whatsoever of how this policy would be funded.
It is high time for blunt honesty with the electorate.
It was refreshing to hear from Kemi Badenoch that half of every saving in spending will go towards reducing the national debt.
We’ve only just had the 50th anniversary of the IMF bailout to the UK, we should be proactive in addressing this debt crisis as a country; a serious debt crisis is brewing, which needs to be addressed by reducing the size of the state regardless of the political capital that needs to be spent. The electorate can very clearly see and differentiate between decisions made on the basis of national interest and those made solely for political gain. The current size of the state is totally unsustainable.
Ahmed Imtiaz is a qualified barrister working as a legal counsel for a global insights platform in London. He was a candidate for Westminster Council in the May local elections.
Following the financial crisis, lending cash to developed countries has generally been considered a safe bet.
This trend is changing quickly, with investors demanding higher returns on the money they are lending. The average 10-year benchmark yield of G7 countries has hit 4 percent, the first time this has happened since 2008. Britain became the first G7 country to see borrowing costs hit the 6 per cent mark, a level not seen since 1998.
There are three main factors fueling the higher premium demanded by investors across the world. First, there is an expectation that inflation will remain higher for longer. Investors anticipate that, due to the Iran war, which pushed energy prices very high and disrupted the global energy supply chain, higher inflation is here to stay. The European Central Bank has increased interest rates twice since the Iran war, with rates climbing from 2 per cent to 2.5 per cent. The Federal Reserve in the United States, for the first time since 2023, hiked interest rates. The Bank of England has not yet raised rates, but there is a clear understanding in the financial markets that the central banks, including the Bank of England, will increase rates if energy prices remain elevated.
The second cause of elevated bond yields is the oversupply of bond issuance. Beyond unrealistic public spending by many major economies worldwide, which is prompting them to borrow more, large US tech firms are borrowing at an unprecedented rate, creating headwinds for US Treasuries, UK gilts, and other major markets. These tech firms are borrowing huge amounts of capital, and they enjoy very high bond ratings thanks to their healthy balance sheets. According to an estimate by Goldman Sachs, investors provided about 500 billion USD of financing to tech-related groups so far this year. As per this estimate, there will be 1 trillion USD of new bond issuance by US tech giants in the next few years. This oversupply of bond issuance by large tech firms, which are more than certain to honour their commitments, is allowing investors to demand higher yields for government-related debt.
The third and most important factor is the unsustainable level of debt globally. According to a paper by the Institute for International Finance, gross global debt has reached 311 per cent of global GDP at the end of the first half of 2026. The United States has seen its government debt climb to a record 40 trillion USD. Here in the UK, debt interest payments now account for £8 of every £100 the government spends. The combined interest payment bill on the debt for OECD countries exceeded 2 trillion USD in 2025. It is worth pointing out that our debt crisis is more severe than that of the US; we do not have artificial intelligence-led growth to offset it. According to the Federal Reserve Bank of Atlanta, the US is expected to grow at 5.1 per cent in the third quarter. A dangerous consequence of the debt crisis can also be seen in France, where the Prime Minister, Sebastian Lecornu, rightly wants to cut public spending, but there have been very violent protests lately over proposed cuts. France’s finance ministry expects public debt to hit a record 119.3 per cent of GDP.
The budget deficit in France is running at 5.4 per cent of GDP, almost double the limit set by the European Union, which is 3 per cent .
Many incumbents and challengers alike across the globe are totally overlooking the signals from the bond market. The populist right and the populist left-wing parties are solely focused on their political ambitions, ignoring the financial implications of their actions. Donald Trump recently promised every American 5,000 USD if Republicans win the midterms in November. It is disappointing, to say the least, to see such a handout promise being made by a Republican president. Jean-Luc Melenchon, a leader of the left-wing party in France and a presidential hopeful, has bizarrely proposed that the Bank of France should write off the debt that the government has obtained from the bank, which is roughly 18% of France’s total debt. In September, Brazilian President Lula increased welfare handouts as the nation approached the first round of elections; this ultimately proved futile as he lost the first round to a market-friendly Flavio Bolsonaro, son of former president Jair Bolsonaro. It is quite evident that the economic approach of populist leaders, regardless of their politics, is strikingly similar: win the next ballot, and worry about the financial consequences later.
A similar facetious approach can be seen here in the UK. At the Labour Party conference in Liverpool, Prime Minister Andy Burnham promised the creation of a national care service, which will cost around 80 billion GBP; there was no indication whatsoever of how this policy would be funded.
It is high time for blunt honesty with the electorate.
It was refreshing to hear from Kemi Badenoch that half of every saving in spending will go towards reducing the national debt.
We’ve only just had the 50th anniversary of the IMF bailout to the UK, we should be proactive in addressing this debt crisis as a country; a serious debt crisis is brewing, which needs to be addressed by reducing the size of the state regardless of the political capital that needs to be spent. The electorate can very clearly see and differentiate between decisions made on the basis of national interest and those made solely for political gain. The current size of the state is totally unsustainable.