DEVELOPED nations’ budget deficits are growing this year, despite widespread efforts to bring down government borrowing, the Organisation for Economic Co-operation and Development (OECD) warned yesterday.
Overall the 34-nation strong group will borrow $10.9 trillion (£7.19 trillion) in 2013, up on the $10.8 trillion they needed last year.
The debt to GDP ratio of the countries will rise to 111.4 per cent in 2013 – though the rate of increase will slow to 1.1 per cent from 2013 to 2014, down from an 11.5 per cent rise between 2008 and 2009.
The slow economic recovery across much of the rich world – and particularly the Eurozone – has made the fiscal readjustment harder, the report noted.
And it added that low interest rates and money printing by central banks has helped ease the pressure on governments so far, but could lead to more problems in the long run.
“With a further increase of central bank holdings of government securities, a smooth exit from accommodative asset purchase programmes at the appropriate time might become more challenging,” the OECD’s report explained.