(Please note: The following is a general guide compiled from various sources. It reflects a range of predictions, summaries, and viewpoints regarding the financial situations of different countries. There is no single definitive perspective, and opinions may vary widely across media outlets. The goal is to help our members stay informed and aware of the broader discussions currently taking place in public and financial media).
What Is the Debt-to-GDP Ratio?
The Debt-to-GDP ratio compares a country’s total debt to the total value of goods and services it produces annually (its Gross Domestic Product – GDP).It helps indicate how capable a country is of repaying its debt based on its economic output.
Formula:
Debt-to-GDP Ratio = (Debt ÷ GDP) × 100
- Total Debt: Typically refers to government debt (the amount a government owes).
- GDP: The economic output of a country in a year.
Why the Debt-to-GDP Ratio Matters
- High Ratio: Indicates a country owes more compared to what it produces. This could signal potential difficulty in managing debt, especially if economic growth slows.
- Low Ratio: Suggests a country is producing enough to comfortably manage its debt, providing more stability.
Benchmarks:
- Below 60%: Generally seen as healthy by many economists, especially in the EU and UK.
- Above 100%: Indicates debt exceeds annual output. Not inherently bad but can become risky in times of economic slowdown or rising interest rates.
Example:
If a country has $10 trillion in debt and produces $20 trillion in GDP:
Debt-to-GDP = (10 ÷ 20) × 100 = 50%
This means the country owes 50% of its annual economic output.
How Do Countries Manage High Debt?
Countries with high debt ratios need to take steps to keep their economies stable. Here’s how they can manage:
- Boost Economic Growth
- Investing in infrastructure and exports can increase GDP.
- Example: If GDP rises from $1T to $1.2T with no change in debt, the ratio improves. - Control Spending & Improve Tax Collection
- Cutting waste and improving tax systems helps reduce the debt burden. - Moderate Inflation
- Some inflation can reduce the real value of debt, but excessive inflation harms consumers. - Structural Reforms
- Enhancing productivity, reducing unemployment, and business-friendly reforms can increase efficiency. - Debt Restructuring
– Countries in distress may renegotiate debt terms with creditors. - Debt Monetisation (Risky)
- Central banks may buy government bonds or print money. Short-term fix, but may lead to inflation.
Debt-to-GDP Ratios in 2024: Key Countries
Here’s a look at some countries with the highest debt-to-GDP ratios and their economic situation:
| Country | Debt-to-GDP Ratio | Key Notes |
| Japan | 252.4% | Highest globally; aging population and low productivity. |
| Greece | 168.8% | High, but improving after Eurozone crisis. |
| Italy | 137.3% | Persistent deficits; under pressure to reduce debt. |
| United States | 121.0% | High due to sustained deficits and $34 trillion debt. |
| France | 110.6% | Increased due to energy and living-cost crises. |
| United Kingdom | 101.1% | Inflation support raised debt post-pandemic and crisis measures. |
Countries with Low Debt-to-GDP Ratios
| Country | Debt-to-GDP Ratio | Notes |
| Kazakhstan | 8.0% | Very low debt, strong economic position. |
| Russia | 19.9% | Low debt, but economy affected by sanctions. |
| Saudi Arabia | 22.0% | Oil revenue allows flexibility and low borrowing needs. |
What Does This Mean for Trade Union Members?
- High-Debt Countries:
Governments may reduce spending on services like healthcare, pensions, and infrastructure. This can affect public workers, job security, and benefits.
Budget cuts can put pressure employment rights and social protections. - Low-Debt Countries:
They are better positioned to invest in services, infrastructure, and job creation.
This generally supports stronger employment rights and employment benefits.
Looking Ahead to 2025
Predictions and Summary
While final data for 2025 is still pending, early indicators show some countries, such as Greece and Sudan, are still grappling with high debt. Others, like Bangladesh and Kazakhstan, continue to maintain low debt levels, offering more room for social investment.
Key points:
A country’s ability to manage debt through economic growth, responsible policy, and reform will determine how much it can invest in public services and workers.
It is of keen interest to the WEU to observe how the UK is doing!!
What is the WEU doing on your behalf?
- The WEU Advocates for Economic Policies that ensure sustainable debt management, focusing on growth and social benefits. The WEU advocates for fair economic policies that teat all the citizens equally.
- The WEU Monitors Government Spending to ensure that debt repayment does not lead to cuts in essential services, such as healthcare, education, or workers’ employment rights. As a member of the WEU we want to protect your employment rights
- Push for Fair Taxation and reforms to ensure that the burden of debt isn’t placed on working people. It is important that one section of society or country within the UK isn’t overly penalised to ensure significant benefits to another section of society or country within the UK.
Stephen Morris, General Secretary, of the Workers of England Union said: –
“By explaining the Debt-to-GDP ratio, the WEU hopes to explain why our Trade Union advocates to change policies that protect workers and ensure that UK debt does not become an obstacle to growth and lowering your employment rights.
He continued
“Every country within the UK has unique financial issues. The WEU wants fairness in taxation policy across the UK, please be assured that the WEU will and does advocate for you as a worker”.