Header and navigation menu

Page content

Fiscal policy, quality and quantity

After three major crises where fiscal support was used to support economies, public debt ratios stand at historically high levels in most advanced economies. In 2007, before the Global Financial Crisis, COVID-19 pandemic, and energy crises, debt levels were substantially lower than today, shown by the white diamonds in Figure 1. The average public debt to GDP ratio across G7 countries was 84%. Fast forward to 2025, and we’re looking at a spectrum ranging from Germany, with public debt relative to GDP at around 70%, to Japan, where it stands at around 240%.  We have also observed a shift in expectations around fiscal policy’s role in responding to economic shocks. […]