RIYADH: Global government debt is set to rise 9.5 percent this year to a record $71.6 trillion, driven by the United States, Japan and China, asset management firm Janus Henderson said in a report on Wednesday. Governments across the world have ramped up borrowing since the COVID-19 pandemic erupted two years ago, as they tried to shield their economies from the fallout. That took global government debt to a record $65.4 trillion in 2021, compared to $52.2 trillion in January 2020, Janus Henderson said. China’s debt rose the fastest and by the most in cash terms, up a fifth or by $650 billion last year, it added. Among large, developed economies, Germany saw the biggest increase in percentage terms, with its debt rising by 15 percent, almost twice the average global pace. Italy cuts growth forecasts, confirms 2022 deficit goal at 5.6 percent of GDP Italy has downgraded its growth estimates for this year and next and confirmed a previous 2022 budget deficit target of 5.6 percent of national output, according to a draft government document seen by Reuters. The Treasury’s annual Economic and Financial Document forecasts gross domestic product will grow in 2022 by 3.1 percent, down from a 4.7 percent projection made last autumn, the draft shows. For 2023, the government sees GDP rising by 2.4 percent, down from the previous target of 2.8 percent set in September. The deficit is targeted at 3.9 percent of GDP in 2023, unchanged from the previous goal. The new forecasts are set to be approved by Prime Minister Mario Draghi’s government later on Wednesday and will form the preliminary framework for the 2023 budget. UK households’ financial situation worst since Q2 2020 British households’ financial situation is now the most precarious since the depths of the COVID-19 pandemic in the second quarter of 2020, due to a surging cost of living, a survey showed on Wednesday, according to Reuters. Pensions company Scottish Widows, part of Lloyds Banking Group, said 60 percent of households had been unable to save more during the pandemic, and that those households which had savings were now running them down at the fastest rate in nine years. “Over 70 percent of households will need to eat into their savings in the next 12 months in order to meet their growing expenses,” Emma Watkins, a managing director at Scottish Widows, said. British consumer price inflation hit a 30-year high of 6.2 percent in February and the government’s budget watchdog forecasts it will peak at a 40-year high of 8.7 percent toward the end of this year, due to surging energy costs and broader price rises. The budget watchdog also said the fall in real incomes would be the greatest since records began in 1956 as wages failed to keep pace with prices. Polling company Ipsos MORI surveyed 4,500 people aged 18-64 between Jan. 27 and March 8 for Scottish Widows. UK construction growth buoyant in March despite inflation pressure British construction output maintained strong growth last month, but builders feared fast-rising inflation would reduce demand from clients as well as squeezing their own profit margins, a survey showed on Wednesday, according to Reuters. The S&P Global/CIPS construction Purchasing Managers" Index was unchanged in March at 59.1, its joint-highest reading since June 2021 and bucking economists" average forecast in a Reuters poll for a fall to 57.8. The wider all-sector PMI, which includes previously released services and manufacturing data, rose to its highest since June 2021 at 60.7, up from February"s 59.8. Quick ECB action to rein in inflation could crash economy Growth rates in the eurozone could dip into negative territory this year and European Central Bank policy tightening to bring down high inflation in the near term risks crashing the economy, ECB board member Fabio Panetta said on Wednesday. With eurozone inflation at a record-high 7.5 percent, the ECB is increasingly coming under pressure to tighten policy, even if the bulk of rapid price growth is due to high energy prices, which are largely outside the bank’s control. Instead, Panetta said European governments should help the most vulnerable households and jointly finance what is likely to be a costly transition away from Russian energy. “Quarter-on-quarter growth rates will be very low this year,” Panetta said in a speech. “The adverse impact of the war could well bring them into negative territory and produce longer-lasting effects. Eurozone financial system coping well with Ukraine war The eurozone’s financial system is coping well with the war in Ukraine and the associated Western sanctions on Russia, ECB Vice President Luis de Guindos said on Wednesday. “For the euro area, the financial stability impact of the war has so far been relatively contained,” de Guindos told a conference. “Markets have generally been functioning well.” “While both banks and non-banks have been affected – especially the few that have large direct exposures to Russia and Ukraine – the economic fallout has not had a sizeable impact on the EU banking or financial systems as a whole,” he added. Swedish economy shrank 0.8 percent in February from January Sweden’s economy shrank by 0.8 percent in February from the previous month on a seasonally adjusted basis, preliminary data from the Statistics Office published on Wednesday showed. Economic activity was 2.5 percent higher in February than in the same month in 2021. China’s services sector activity squeezed by omicron surge Activity in China’s services sector contracted at the steepest pace in two years in March as the local surge in coronavirus cases restricted mobility and weighed on client demand, a private sector survey showed on Wednesday. The Caixin services PMI dived to 42.0 in March from 50.2 in February, dropping below the 50-point mark that separates growth from contraction on a monthly basis. The reading indicates the sharpest activity decline since the initial onset of the pandemic in February 2020. The survey, which focuses more on small firms in coastal regions, tallied with the gauge of an official survey, which also showed the deterioration in the services sector. The Caixin PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in China.