Global Debt Now Stands At $199 Trillion

Global debt has grown by $57 trillion or 17 percentage points of GDP or worldwide income since 2007, to stand at $199 trillion, equivalent to 286% of GDP, said McKinsey Global Institute.

After the explosion of borrowing in the boom years that led to the great crash and recession of 2007-08, most governments - especially those of rich developed countries - said they would embark on policies that would lead to greater saving, debt reduction and what's known as deleveraging, said the influential consultancy.

They implied they would encourage prudence, so that the sum of household, business and government debt would fall.

The single biggest contributor to the rise and rise of global indebtedness is that government debts have increased by $25tn over these seven years, said MGI.

What is striking is that of 47 big economies, only five - Israel, Egypt, Romania, Saudi Arabia and Argentina - have actually succeeded in reducing their debts.

But a further five have seen massive increments in their indebtedness: the debts of China have risen by 83 percentage points, Portugal's by 100 percentage points, Greece's by 103 percentage points, Singapore's by 129 percentage points and Ireland's by 172 percentage points.

McKinsey argues that China's central government does have the financial capacity to cope with a fully fledged financial crisis. It calculates that even if half of property related loans defaulted and lost four-fifths of their value, any financial rescue would see government debt rising to around 79% of GDP - which would be roughly equivalent to the UK's current public-sector indebtedness.