The US national debt reached a historic, unprecedented $40trillion on Tuesday, a sum so enormous even folks who know about such matters struggle to grasp its scale or import.

So let me put it this way: it’s 124 per cent (using IMF stats) of America’s gargantuan GDP, which is by far the world’s biggest.

It follows that even if the US used every cent of this year’s GDP to pay off its accumulated borrowings, it would still remain many trillions in the red. Put another way, it’s ten times the UK’s annual GDP, which is quite the staggering statistic, since we’re still the fifth or sixth largest economy in the world. Not that we can gloat.

We are on the brink of passing our own milestone for fiscal profligacy: Britain’s national debt is now just a whisker shy of £3trillion which (on an IMF basis) is just over 100 per cent of our GDP.

But what marks out America’s national debt isn’t just the scale – it’s the pace at which the US is adding to it.

While other major economies, including Britain, try to stop their national debt from ballooning still further by squeezing their annual budget deficits, the US blithely borrows more and more. America is adding to its already massive debt at the fastest rate of any major market economy.

This year the US will borrow another $2trillion – almost 6 per cent of its GDP – and, according to official forecasts, will continue to borrow around 6 per cent a year well into the next decade. Include state and local government borrowing as well as federal and the US will be borrowing closer to 7.5 per cent of its GDP in 2026.

This matters hugely to the rest of us – for America’s insatiable appetite for debt pushes up the cost of borrowing for everybody. It was noticeable this week that, as the global bond markets (where governments go to borrow) grew noticeably twitchy at America’s growing addiction to debt, the cost of borrowing for other major economies – Britain, Germany, France – started to rise too.

This is especially bad news for the UK because we already pay more to borrow than any other member of the G7 club of the world’s biggest market economies. Indeed, the interest rates on our bonds are now the highest of any developed market economy in the world, bar Poland (which at least has had the sense to use its borrowings to rearm on a scale that shames Britain).

The interest on government bonds (or yield as it’s technically known) might seem far removed from your daily struggle to make ends meet. But these rates set the rate for other lending, including mortgages and business loans. If you’re hoping for some relief on either of these fronts then prepare to be disappointed. High interest rates are here to stay. Indeed, I expect them to get higher. The more governments borrow, the more it costs us – not just in annual debt service charges ($1trillion in America this year, over £110billion in the UK) – but in higher interest rates all round.

It’s not just America to blame. Every major economy is in hock to the bond markets. France’s national debt is 116 per cent of its GDP, Italy’s 137 per cent, and Japan tops them all with 204 per cent. Like Britain, they’re all still running substantial budget deficits, which add to the debt pile. Only Germany can lay claim to be relatively frugal with a national debt that’s 63 per cent of GDP (though it’s now borrowing more to rearm).

Until recently, America thought it could borrow as much as it wanted. The immense strength of the US economy and the dollar’s status as the world’s reserve currency meant global investors queued up to hold dollars and dollar-denominated assets, including US Treasury bonds. That conferred on America a ‘safe haven’ status which kept borrowing costs low.

The combination of reckless tax cuts and spending rises under Donald Trump and Joe Biden since 2016 have tested that proposition as never before – and found it wanting. Lenders have concluded America is no longer as safe as they thought. Nor are its institutions as trustworthy or reliable.

They’ve watched Trump try to interfere with the independence of the Federal Reserve, the keystone of US monetary policy.

They’ve seen Trump sow economic chaos with his madcap use of tariffs. They’ve seen the US Treasury Department, under the uncertain hand of Scott Bessent, try this very week to manipulate bond yields (and fail – ‘like using a water pistol to put out a wildfire’, observed one bond trader).

So lenders are doing what they always do when they perceive rising risks: they demand higher returns for their money, even from America. Which pushes up risk premiums for the rest of us. But there’s something even more fundamental at work.

The bond markets have concluded, rightly in my view, that politicians on both sides of the Atlantic have given up the ghost of ever getting to grips with debt and deficits. Nobody has the guts to take away the punchbowl.

Voters lap this up – it’s easier than asking the hard questions or steeling themselves for tough choices. At some stage, of course, there will be a terrible reckoning. There always is. It will be all the more terrible because it’s not just governments borrowing on a grand scale.

America’s four biggest AI hyperscalers will invest $745billion this year, a big chunk of it borrowed. Between now and the end of the decade, they plan to invest several trillion dollars, pushing up interest rates for everybody, including governments.

A confluence of events in the public and private sectors is conspiring to flood the world with debt. Geopolitical instability makes that all the more dangerous. The ongoing wars in the Gulf and Ukraine – in neither is the end in sight – will continue to push up the price of energy and food, heralding a new cost-of-living crisis this winter.

More inflation, more uncertainty – more reasons for lenders to demand higher returns for their cash from those who want to borrow. For a world awash in debt it’s close to the perfect storm.

And few developed countries are as vulnerable as Britain. Be in no doubt: in these times of bond market turbulence, we are in the crosshairs. The elevated costs we already pay to borrow are proof enough of that. So time, you might think, to batten down the hatches and prepare as best we can for what is coming.

But not a bit of it. We have a Labour governing class, in office and on the backbenches, that has no understanding of what is brewing and believes it’s still business as usual.

It exhibits a level of ignorance to rival Angela Rayner’s grasp of property taxes, led by a former mayor whose response to the gathering storm is to drop into another bus station. This week, Labour MPs cheered when Andy Burnham’s spin machine let it be known he was keen to restore spending on international aid to 0.7 per cent of GDP.

That’s another £13billion a year on top of an extra £18billion for social care and many billions more for various wheezes to extend public ownership. And let’s fiddle these fiscal rules while we’re at it. Well, why not? We’re rolling in money, aren’t we?

Those whom the gods would make mad are first made to serve an apprenticeship in Labour’s soft Left. Looking back, when the last great financial crisis hit in 2008, we were actually in pretty good shape to handle it. The economy was strong, growth was good, debt was less than 40 per cent of GDP, tax and spend were at reasonable levels.

Today, things could not be more different. I can’t imagine us in worse shape. A precarious fiscal position, record debt, little growth, tax and spend at historic highs, ruled by ignoramuses who don’t know what’s coming and will have no idea what to do when it hits them.

Far from being well-prepared, we’re pretty much defenceless.