Debt mountains spark fears of another crisis

Debt mountains spark fears of another crisis - FT.com
The world is awash with more debt than before the global financial crisis erupted in 2007, with China’s debt relative to its economic size now exceeding US levels, according to a report.
Global debt has increased by $57tn since 2007 to almost $200tn — far outpacing economic growth, calculates McKinsey & Co, the consultancy.
As a share of gross domestic product, debt has risen from 270 per cent to 286 per cent.
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McKinsey’s survey of debt across 47 countries — illustrated in an FT interactive graphic — highlights how hopes that the turmoil of the past eight years would spur widespread “deleveraging” to safer levels of indebtedness were misplaced.
The report calls for “fresh approaches” to preventing future debt crises.
“Overall debt relative to gross domestic product is now higher in most nations than it was before the crisis,” McKinsey reports. “Higher levels of debt pose questions about financial stability.”
Overall, almost half of the increase in global debt since 2007 was in developing economies, but a third was the result of higher government debt levels in advanced economies.
Households have also increased debt levels across economies — the most notable exceptions being crisis-hit countries such as Ireland and the US.