IMF warning over global debt burden of £115trillion

GLOBAL debt stands at a record £115trillion – posing a huge threat to financial stability, the IMF warned last night.

A decade of super-low interest rates and profligate government spending poses the most serious risk of a financial crisis since the collapse of Lehman Brothers in 2008, it said in a hard-hitting report.

The IMF told Western governments they should build a financial buffer to help them weather the next crisis.

It will be seen as a rebuke to Labour plans for higher spending that would plunge Britain deeper into the red, with Shadow Chancellor John McDonnell intending to nationalise swathes of industry. Over- all private and public debt are already equal to 225 per cent of global economic wealth, the IMF warned, with nations 12 per cent deeper in the red than 2009 – the time of the banking bailouts.

China was responsible for much of the increase but the IMF was highly critical of Western governments – most notably the United States – for failing ‘to build a fiscal buffer for tempestuous times ahead.’ In the US, debt stands at 108 per cent of national output and in Japan the level is 206 per cent.

However, UK debt as a percentage of output is projected to drop to 86.3 per cent this year. With debt levels so high, the IMF’s top financial regulator Tobias Adrian warned central banks at a spring summit in Washington to go slow on interest rate rises to avoid causing havoc on financial markets.

‘Tempestuous times ahead’