ANDREW NEIL: With the AI bubble, soaring debts and rising interest rates, even the hardiest souls are spooked. We should ALL be fearful of the financial crisis that’s coming
Andrew Neil warns that a combination of soaring debt, rising interest rates and an AI investment boom is creating serious risks for the global financial system, echoing concerns raised by Bank of England Governor Andrew Bailey. In his role as chairman of the Financial Stability Board, Bailey told G20 finance ministers meeting in North Carolina that the global financial system is increasingly vulnerable to shocks, a warning that has revived fears of a correction in stock markets that have been driven higher by heavy borrowing. Neil argues the underlying problem is that governments worldwide, especially the United States, have become addicted to debt, with borrowing showing no signs of slowing under the Trump administration.
The article cites the US national debt surpassing $40 trillion this summer, with the Trump administration projected to add nearly $2 trillion annually to deficits, pushing long-term US Treasury borrowing costs above 5.2 per cent and average mortgage rates to around 6.7 per cent. It notes that America's AI hyperscalers are also adding pressure on credit markets by investing several trillion dollars in the technology. The UK faces a similar trajectory, with national debt set to exceed £3 trillion, borrowing costs among the highest in the G7 and G20, and 30-year gilt yields near 5.78 per cent, their highest in almost three decades — driving up mortgage and loan rates despite a lower Bank of England base rate.
- Andrew Bailey warns global financial system is increasingly vulnerable to shocks
- US national debt has passed $40 trillion, deficits still rising
- UK borrowing costs also near multi-decade highs, pushing up mortgage rates
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Governments borrow by selling bonds to investors, with the cost of borrowing affected by the interest rates investors demand. The United States and the United Kingdom both have large public debts, and higher borrowing costs can make it more expensive for governments to service that debt and for households and businesses to take out loans.
Artificial intelligence companies are investing heavily in data centres and other infrastructure, sometimes using borrowed money. If investors become less confident about the returns from that spending, share prices and credit markets could be affected.
The Bank of England Governor, Andrew Bailey, has warned G20 finance ministers that the global financial system is vulnerable to shocks. These concerns matter because financial markets and borrowing costs are connected across countries, so problems in one area can affect governments, businesses and households elsewhere.
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The case for
The risks Neil highlights could justify concern: heavy government borrowing, high financing costs and vast AI investments may leave markets more exposed if growth disappoints or investors reassess asset values. With public debt already large, a sharp correction could raise borrowing costs further and constrain governments’ ability to respond, so early warnings may help policymakers and investors prepare.
The case against
High debt and expensive borrowing do not by themselves make a financial crisis inevitable; outcomes depend on economic growth, future policy and whether AI investment produces lasting returns. Warnings about a coming crisis can overstate what current indicators establish, while abrupt alarm could itself unsettle markets and distract from more measured steps to manage debt and financial risks.