Why Worry About Rising Debt?

There are numerous concerns about whether the recent rapid acceleration in inflation in recent months will put a break to the bounce-back of the world economy in 2022. In the UK the Bank of England just revised its forecast for this year to 3.75%, a sharp cut from the 5% they expected in the autumn[i]. Not only are workers being affected by a cost of living crisis, mainly as a result of higher world energy costs, but higher interest rates will also act as a dampener to growth. However there is extra dimension that will hang over any recovery, possibly limiting its growth – namely the level of accumulated debt, both public and private during the pandemic which may well prove even more of a challenge than the disruption caused by what is now the highest rate of inflation in 30 years