Could the Iran war trigger the next debt shock?

Borrowing costs in major economies have reached the highest levels in nearly two decades. Investors are reducing exposure to government debt and requiring higher returns. Concerns focus on the Iran war potentially keeping oil prices and inflation elevated. Global debt risks approaching World War Two-era levels, according to the International Monetary Fund. The United States plays a central role because it largely determines borrowing costs worldwide. Higher rates translate into larger mortgage repayments and car loan costs, more expensive consumer credit, and higher business financing costs that can be passed to consumers. For developing nations, dollar borrowing adds additional strain to already stretched public budgets.

"Borrowing costs in major economies have hit their highest levels in nearly two decades. Investors have been shunning government debt and demanding higher returns. They worry that the Iran war could keep oil prices and inflation high. The International Monetary Fund warns that global debt could approach World War Two levels."

"At the centre of it all is the US, which largely sets borrowing costs worldwide. That means higher mortgage repayments and car loans, more expensive credit, as well as rising business costs passed on to consumers."

"For developing nations borrowing in dollars, it puts even more pressure on stretched budgets."

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