Global debt is touching “dangerous” levels as demands for higher European defence spending and spiralling deficits threaten to trigger an investor backlash.

The Institute for International Finance (IIF) singled out France, the US and China as it warned there was no end in sight for government debt binges against a backdrop of war and political upheaval.

The institute, which was heavily involved in Greece’s debt restructuring during the eurozone crisis, said global debt rose by almost $7 trillion (£5.5 trillion) to a new record of $318 trillion in 2024.