The world of scrolling news is a strange one. Headlines stream all day with the really important ones, as designated by a robot somewhere, coming up in RED, but occasionally one of the yellow ones catching your eye and provoking a moment’s thought.

Today has been one of those days. Whilst sipping my afternoon cup of tea (I am from Yorkshire after all), I noticed the headline:

U.S. Debt Load Seen Worse Than Italy’s by 2023, IMF Predicts

Really? I thought. Surely not. It is well known that Italy has a public sector debt problem; it was involved in a small funding crisis not so long ago. But the US?

Intrigued, I read the story behind the headline. And true enough, the International Monetary Fund has produced forecasts for the G7 group of countries suggesting that, if correct, the US government debt to GDP ratio will be as high as Italy’s in 2023 at around 117% of GDP.

Some further thought on the two countries… One has a large current account deficit (US), the other a current account surplus (Italy). One has a heavily indebted private sector and a low savings rate (US) and the other a high savings rate and low level of indebtedness (Italy). Which country is most likely to suffer the next funding crisis?

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