G7 Government Debt (% of GDP)

Key observations

• Japan's debt is in a different league — over 250% of GDP. This reflects decades of deficit spending to fight deflation and a shrinking tax base. The large share held domestically and the Bank of Japan's YCC policy have so far prevented a crisis, but the trajectory is concerning.
• Italy entered 2020 already carrying 135% of GDP in debt, making its COVID fiscal space extremely limited. The Draghi-era recovery and strong nominal GDP growth (boosted by inflation) pushed it down to ~136% by 2025 — a relative improvement, but the absolute level remains a market concern.
• The US debt trajectory is the most politically contentious. It surged to 133% in 2020 after CARES Act stimulus, then fell slightly on strong nominal GDP growth — but is drifting higher again. The IRA and infrastructure spending maintain structural deficits.
• Germany reduced its debt ratio every year from 2011 to 2019 (the Schuldenbremse effect). COVID broke the streak dramatically (+9 pp in 2020), but Germany has since outperformed peers in rebuilding fiscal space, returning below 65% by 2024.
• Canada and the UK both saw debt jump sharply in 2020 and have made partial but not full recoveries. The UK in particular faces structural fiscal pressure from high debt-servicing costs at current interest rates.
• France has shown essentially no fiscal consolidation since 2016 — debt remains near 113% of GDP regardless of the economic cycle, a persistent tension with EU fiscal rules.