Swimming against the sea of debt

  

Last week’s Budget deal in the US which Funds US government until 15 January 2014 can be viewed as merely kicking the can down the road.

The US has a total debt pile of almost $17 trillion (£10.6 trillion), which is expected to rise to almost $23 trillion in the next five years.

Japan is not far behind, with current debts totalling $11.5trillion.

Much of this debt has been accumulated over the long term, but the numbers have rocketed in recent years as governments have struggled to cope with the 2008 financial crisis and the subsequent recessions that have ravaged almost all major economies. Banking bailouts, economic stimulus measures and falling tax revenues have all forced governments to borrow more.

For example, in 2007, the UK's debt pile was just 44% of GDP compared with 88% last year. This reflects in part the country's large financial sector relative to its overall economy. The US's debt-to-GDP ratio in 2007 was 64%, the same as France and Germany.

As always after peering over the brink that is a collective sigh of relief but there remains no doubt that the spectre of indebtedness will re-emerge to haunt both markets and governments.