World is at ‘tipping point’ after global debt binge, warns HSBC boss

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The world is at a “tipping point” on debt that threatens to spark a global reckoning after years of government borrowing binges, the boss of global banking giant HSBC has warned.

HSBC CEO Noel Quinn said countries risked being “hit hard” after allowing borrowing to balloon in the wake of the financial crisis and pandemic. Speaking at the Future Investment Initiative Institute’s summit in Saudi Arabia, known as Davos in the Desert, he said the current rate of borrowing was unsustainable.

“I’m concerned about a tipping point on fiscal deficits,” Quinn said. “When it comes, it will come fast, and I think there are a number of economies in the world where there could be a tipping point and it will hit hard.”

HSBC chief Noel Quinn at the bank’s headquarters in Canary Wharf, London.Credit: Bloomberg

Mr Quinn’s comments came as a series of top Wall Street bankers warned about the health of the global economy as the war between Hamas terrorists and Israel threatens to spread across the Middle East.

Larry Fink, the chairman and chief executive of Blackrock, suggested that growing tensions threatened to throw the world into recession.

Speaking at the same event, he said: “There’s no question if these things are not resolved, it probably means more global terrorism, which means more insecurity, which means society is going to be fearful [and] we see contractions in our economies.”

The International Monetary Fund and World Bank sounded the alarm over global debt levels earlier this month, warning that the US and China had put public debt on course to approach the size of the entire global economy by the end of the decade.

Ayhan Kose, the World Bank’s deputy chief economist, described the debt binge since 2010 as “the fastest, most broad based and largest” the world had ever seen. Previous debt waves have all led to financial crises.

Kose warned that emerging markets were already in the middle of a “silent debt crisis”, where governments are crushed by debt and unable to fund public services.

Meanwhile, Jamie Dimon, the chairman and chief executive of Wall Street giant JP Morgan, called for “some humility about financial forecasting”.

“I want to point out that central banks 18 months ago were 100 per cent dead wrong,” he told the event in Riyadh.

The Telegraph, UK

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