Public debt levels in advanced economies have risen significantly in the past two decades. The Global Financial Crisis, the Pandemic and the rapid rise in energy prices in Europe, required large fiscal interventions to help support the economy. At the same time, economic growth has been weak. As a result of these adverse dynamics, public debt levels in many OECD countries are now at high levels relative to history. This makes these countries vulnerable to future ratings downgrades and runs on government debt, as the UK experienced in 2022.

Read Tomasz Wieladek’s essay Beware of Financial Repression as a Fiscal Remedy.