The Rising Tide of Government Interest Costs (Cole) | Idea Farm

The Rising Tide of Government Interest Costs (Cole)

Goldman Sachs

George Cole

Research

10 Pages

September 2025

Goldman Sachs explains why G10 government interest costs are still climbing even as policy rates peak: large debt stocks are being refinanced at higher rates while deficits remain wide. The note assesses what actually moves the needle—debt maturity choices, policy-rate paths, and fiscal consolidation—and why budget pressures may persist alongside steeper curves and higher term premia.

Key Takeaways

Rising interest burden: G10 interest outlays are projected to increase ~0.5 percentage points of GDP by 2029.

WAM savings small: Shortening average debt maturity by one year saves roughly 3 basis points in interest costs.

Cuts matter more: A 100 bp extra front-end cut trims the increase by up to 0.51 pp in the U.S. (0.43 pp in Japan).

Global Macroeconomics Fiscal Policy

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