US Debt Limit of $41.1 Trillion Expected to Bind in 2027: How Denmark, Germany and the EU Handle Borrowing Limits

The US federal debt limit stands at $41.1 trillion. The July 2025 budget reconciliation law raised it by $5 trillion. That bought about two years. The Congressional Budget Office’s February 2026 outlook says the Treasury will reach the limit sometime in 2027. The Bipartisan Policy Center expects it between late winter and mid-summer of 2027, with the Treasury’s accounting manoeuvres, known as extraordinary measures, adding another six to nine months.

So the next debt-limit fight will probably come in late 2027 or early 2028, close to a presidential election year. The Congressional Research Service’s latest update, in September 2026, says recent projections put borrowing near the limit sometime in fiscal 2027, with considerable uncertainty.

What makes the US limit strange

The US limit is a cap on total borrowing that’s separate from the decisions that cause the borrowing. Congress votes for spending and tax laws that produce a deficit. Then it votes separately on whether the Treasury may borrow to pay for them. If it doesn’t, the government risks defaulting on bills Congress already approved.

CBO projects a deficit of $1.9 trillion in fiscal 2026, 5.8% of GDP, with debt held by the public at 101% of GDP this year and 120% by 2036. At that pace, any fixed cap is reached again within a couple of years of being raised.

The extraordinary measures are the Treasury’s way of stretching the cap: delaying some debt sales, temporarily underinvesting certain government funds and swapping securities for debt that doesn’t count toward the limit. They buy months, not years.

Denmark: a ceiling nobody hits

Denmark is the only other rich democracy commonly cited as having a nominal debt ceiling. It’s been in law since 1993. Parliament sets a cap on central government borrowing, and the government borrows freely beneath it. The ceiling was doubled to DKK 2,000 billion in 2010.

The difference is the gap. At the end of 2025, Danish central government debt was DKK 235 billion, 7.6% of GDP. That’s about an eighth of the ceiling. The limit exists in law and almost never matters in practice, because it’s set far above any realistic borrowing.

Germany: a rule on deficits, rewritten

Germany limits deficits, not total debt. Its constitutional debt brake caps the federal government’s structural deficit at a small share of GDP. In March 2025 the Bundestag and Bundesrat amended the Basic Law to make room for rearmament and infrastructure. Defence spending above 1% of GDP is now exempt from the brake. A special fund for infrastructure was created, with €100 billion of it going to the climate and transformation fund. The states, together, may now borrow 0.35% of GDP.

Changing the constitution needs two-thirds majorities in both chambers. Germany did it in a few weeks when the politics lined up. The rule is strict until a broad coalition decides it shouldn’t be.

The EU: rules on paths

The EU’s fiscal rules, reformed in April 2024, keep the treaty reference values of a 3% deficit and 60% debt, but now work through four- to five-year national plans with a net spending path. In July 2025 fifteen member states activated a national escape clause for extra defence spending. Germany followed in October 2025.

The comparison

The approaches differ in what they limit. Germany and the EU limit the flow, how much can be borrowed each year, and make exceptions by vote. Denmark caps the stock but sets the cap so high it rarely binds. The US caps the stock, sets it close to actual debt and makes raising it a separate fight.

The US design is unusual among rich democracies. Because borrowing for spending already approved needs a second vote, whichever side controls that vote gets leverage, and the result has been repeated standoffs. CBO’s 2027 projection means the next one is already on the calendar.