Eight years have passed since sub-prime mortgages started to go disastrously wrong, but the after-effects of the debt crisis are still around. So, as a new report from the McKinsey Global Institute~* makes clear, is the debt. In fact, there is even more of it. Global debt has risen by $57 trillion since 2007-an annual increase of 5.3%. That is not dramatically slower than the 7.3% annual growth rate between 2000 and 2007, a period widely seen as a credit boom. If the financial sector is excluded, no leading economy has managed to reduce its debt-to-GDP ratio; 14 countries have seen their ratios rise by more than 50 percentage points (see chart). In some cases, such as Ireland, this increase merely reflects the fact that financial-sector debt has ended up on the government's balance-sheet because of bank rescues. Shifting debt from the private to the public sector is in some respects a positive step; governments can borrow at a cheaper rate than companies and individuals and, if they have their own currency, have considerable scope to expand their balance-sheets.
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