Rising US debt service costs threaten American power and Europe’s borrowing rates
Historian Niall Ferguson warns that the United States’ growing interest payments could undermine its global standing and push up loan costs in Europe.
British-American historian Niall Ferguson contends that a nation forced to spend more on debt repayment than on military defence signals the slow erosion of a great power. Applying this “Ferguson-Limit” to the United States, he points out that the country’s expected net interest expenses for the 2026 budget will be roughly equal to its total outlays for education and defence combined. Ferguson warns that such a fiscal burden threatens the durability of American influence, particularly as it faces strategic rivalry with China.
He also highlights that rising US bond yields are already translating into higher borrowing costs for European borrowers. Additionally, he suggests that President Trump could leverage his influence to further pressure banks and investors, amplifying financial strain.
Why it matters
US debt costs could weaken American global influence and raise borrowing expenses for European economies.
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