Five of Seven G7 Nations Now Spend More on Debt Interest Than Defense

Germany is the most fiscally comfortable G7 member in this comparison. According to Scope, Germany's interest expenses in 2026 amount to only about 35% of its defense budget .

Key findings and warnings from the report

Record-high debt-to-GDP trajectories

Scope Ratings projects that aggregate G7 general government debt will rise to 135.2% of GDP by 2029, approaching the previous peak of 139.6% reached in 2020 during the COVID-19 pandemic . The IMF separately warned in October 2025 that global public debt is on track to exceed 100% of GDP by 2029, its highest level since 1948, with rising servicing costs squeezing budgets alongside defense and aging-population spending .

Bloomberg notes that interest payments are expected to keep climbing for the US, Japan, and France in particular, as high debt stocks combine with relatively elevated interest rates . For the US alone, Scope calculates that net interest payments will average about 12% of revenues between 2025 and 2030, at least twice the level of comparable peers .

The "fiscal tension" between military commitments and debt

NATO members have agreed to raise defense spending toward 3.5% of GDP by 2035 . But with rising debt-service bills already consuming available fiscal room, governments face a structural squeeze. Scope warned that if France, for example, raises defense spending to 3% of GDP without offsetting austerity measures or EU burden-sharing, its deficit would exceed 4% of GDP by 2029 and its general government debt would surpass 120% of GDP .

Vulnerability without acute stress — yet

Scope's executive director for sovereign and government ratings, Eiko Sievert, noted that most G7 countries have so far avoided acute refinancing crises. However, Sievert warned that "elevated debt burdens, combined with relatively large primary deficits, are increasing the sensitivity of public finances to changes in market funding conditions" . In other words, the structure is more fragile than the headline numbers suggest.

Bottom line

The Bloomberg/Scope report marks a historic fiscal reversal: for five of the seven largest advanced economies, servicing past borrowing now costs more than funding current military capability. With debt-to-GDP ratios still climbing and NATO targets escalating, the tension between sovereign creditworthiness and defense commitments is set to intensify through the rest of the decade.