S&P Global has projected that global government borrowing will hit a record $12.3 trillion in 2025, pushing the stock of long-term debt to $76.9 trillion, primarily due to high fiscal deficits and spending pressures, including on defense.

According to S&P Global, the research arm of S&P Ratings, the US will account for 40 per cent of global long-term issuance, raising its 2025 borrowing by $200 billion to a total of $4.9 trillion, with its fiscal policy likely to remain expansionary.

China would remain the second-largest sovereign issuer, with the equivalent of $2.1 trillion, posting the largest nominal increase amid efforts to stimulate the economy.

It said other major sovereign issuers, primarily G-7 countries, will keep their borrowing broadly flat and high, with ongoing discussions about how to (debt-) finance Europe’s pressing defense spending needs.

Sovereigns’ interest bills will also likely remain elevated as rates could stay higher than previously expected. “For 2025, we expect a three per cent year-onyear surge in sovereign commercial borrowing.

This continues a steady increase since 2022. With lingering inflationary pressures and uncertainty about global trade policy, interest rates might not come down that much, implying still-high funding costs for large developed market issuer,” it stated.

However, for the rest of the world, S&P Global said it expected borrowing to remain broadly flat this year compared with 2024.