The recent resignation of French Prime Minister Michel Barnier after just three months in office has shed light on the western world’s struggle with high national debt. It has become evident that while there is a consensus on the need to address this issue, the sacrifices required are often deferred to a later date or postponed until economic conditions improve.

There are differing opinions on how to tackle the issue of high debt levels. Some argue that reducing borrowing is unnecessary and that countries like the UK could safely take on even more debt. However, the majority believes that a debt-to-GDP ratio exceeding 100 percent is risky and unsustainable. High levels of debt lead to increased costs of servicing the debt, pose risks to financial stability, and limit options in times of crisis.

The ideal debt-to-GDP ratio is considered to be around 60 percent. Yet, governments tend to avoid directly addressing the issue, as doing so would involve unpopular measures such as cuts to public services, increased retirement age, and higher taxes. Politicians often opt for less painful solutions to avoid public backlash.

To appease bond markets and manage interest payments, governments often implement fiscal rules with some flexibility and make promises to cut unnecessary spending. In the UK, Chancellor Rachel Reeves has initiated a drive to reduce departmental spending by 5 percent, while simultaneously approving public sector pay rises and expanding the workforce.

In the US, President-elect Donald Trump has appointed individuals to find ways to significantly reduce federal government spending, although the feasibility of slashing one-third of the budget remains uncertain. Similarly, France’s debt ratio is approaching 112 percent, and Barnier’s efforts to reduce the budget deficit by 1 percent led to his resignation. The austerity measures he proposed, including tax hikes and spending cuts, were deemed too severe.

Despite these challenges, countries like France are urged to address their debt issues and build fiscal buffers to withstand future economic shocks. Tough decisions cannot be postponed indefinitely, and a gradual approach may be the most feasible solution in the long run.

As we navigate through these economic challenges, it is crucial for governments to strike a balance between managing debt levels and ensuring sustainable economic growth. The road ahead may be slow and arduous, but it is essential to address the issue of high national debt to secure financial stability for future generations.