![\"A](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/10\/1422.jpg\")
Photograph: IMF<\/p>\nIntroduction: IMF sounds alarm over rising government borrowing costs<\/p>\n
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n
The jump in government borrowing costs this year is causing concerns at the International Monetary Fund, as policymakers gather in Bangkok for its annual meeting.<\/p>\n
In its new fiscal monitor report, released this morning, the IMF is warning that the rise in sovereign bond yields has \u201craised the fiscal stakes\u201d facing governments, as they try to keep borrowing under control.<\/p>\n
Higher borrowing costs are adding to fiscal pressures at a time of high debt, making credible consolidation more urgent, it points out.<\/p>\n
And it is demanding action, warning that \u201cthe more countries wait, the more painful the adjustment becomes.\u201d<\/p>\n
This is easier said than done, though! France, for example, faces a struggle to push through a budget that would only cut its annual deficit to 5% of GDP. And in the UK, chancellor John Healey could face a battle with his own MPs if he proposes welfare cuts in his budget later this month.<\/p>\n
The IMF points out that since February \u2013 when the Iran war began, and oil prices jumped \u2013 the average 10-year government bond yield for G7 countries increased by over 1 percentage point, reaching its highest level in nearly two decades.<\/p>\n
Photograph: IMF<\/p>\n
With global public debt expected to exceed 100 percent of global GDP for the first time since the immediate aftermath of World War II, this is not a great time for borrowing costs to be hitting the roof.<\/p>\n
Or, as the IMF puts it:<\/p>\n
double quotation markIn major advanced economies, high debt, spending pressures, and the prospect of large bond issuance in the years ahead are putting upward pressure on the yields investors demand to hold longer-term bonds.<\/p>\n
Higher benchmark yields in major economies can also spill across borders, worsening debt dynamics elsewhere.<\/p>\n
The IMF points out that the cost of servicing government debts have already jumped sharply. In the US, for example, interest payments are projected to climb from about 2.8% of GDP before the pandemic to 5.7% in 2031, which is roughly equal to projected expenditure on Social Security.<\/p>\n
It\u2019s worse for low-income countries, where interest payments today consume over 15% of tax revenues.<\/p>\n
The agenda<\/p>\n
9am BST: IEA oil market report<\/p>\n
9am BST: Foreign secretary Ed Miliband speaks at the IMF Annual Meeting in Bangkok<\/p>\n
9.15am: Treasury select committee hearing on Heathrow expansion plans<\/p>\n
1.30pm US inflation report for September<\/p>\n
2.15pm Treasury Committee hearing on the Budget 2026<\/p>\n
Share<\/a><\/p>\n Updated at\u00a002.22 EDT<\/p>\n Key events<\/p>\n Diesel shortages could persist well into 2027<\/p>\n Shortgages of diesel that have driven prices to record level are set to extent well into next year, the International Energy Agency has warned.<\/p>\n In its monthly oil market report, just released, the IEA warn that prolonged disruptions to Middle Eastern and Russian exports have led to a fall in stocks of diesel, ahead of the peak winter demand season.<\/p>\n The per-gallon price for diesel fuel is displayed electronically on a pump at a Buc-ee’s gasoline station in Johnstown, Colorado. Photograph: David Zalubowski\/AP<\/p>\n And while prices were pushed higher, demand remained strong, which the IEA says was partly due to \u201cgovernment measures aimed at easing the impact of high prices on consumers\u201d.<\/p>\n This allowed oil refiners to cash in with higher profit margins (technically known as the \u2018diesel crack spread\u2019), at a time when drivers are paying billions of pounds more at the pumps:<\/p>\n The agency warns that it could take until the second half of next year for inventories to be replenished, saying:<\/p>\n double quotation markFalling inventories, soaring cracks, and steepening levels of backwardation have signalled the need for additional supplies.<\/p>\n However, even with a rapid recovery expected in refinery throughputs into year-end, gasoil supply falls short of meeting demand in 4Q26, suggesting that the replenishment of lost inventories, outside of typical seasonal fluctuations, is unlikely before 2H27.<\/p>\n The IEA also reckons that Donald Trump\u2019s deal to buy diesel from Russia<\/a> is unlikely to help much, explaining:<\/p>\n double quotation markThe recently announced easing of Russian diesel export restrictions is unlikely to materially alter the global gasoil market balance as the current export constraints stem from a lack of operational Russian refinery capacity.<\/p>\n Share<\/a><\/p>\n There\u2019s been a quiet start to stock market trading in London this morning, with the FTSE<\/a> 100 share index up just 6 points (0.06%) to 10,656 points.<\/p>\n Luxury goods maker Burbery (+2.6%) are the top riser, followed by engineering firm Babcock (+1.7%).<\/p>\n Share<\/a>UK bond yields drop with Healey ‘to avoid more borrowing’ in budget<\/p>\n UK government borrowing costs are dropping this morning, which will please John Healey and the IMF alike!<\/p>\n The yield, or interest rate, on UK 10-year bonds is down 3.5 basis points to 5.4%, while thirty-year bond yields are 3bps lower at 5.89%.<\/p>\n That follows a report in the Financial Times this morning that Healey is expected to avoid increasing UK borrowing in the budget later this month.<\/p>\n The FT reports:<\/a><\/p>\n double quotation markChancellor John Healey is expected to pay for all new giveaways in this month\u2019s Budget \u2014 including a cost-of-living package \u2014 with higher taxes or spending cuts rather than more borrowing.<\/p>\n People briefed on UK Budget preparations told the FT that the October 28 fiscal package would be \u201cscorecard positive\u201d in 2029-30, the final year of the parliament, meaning that all extra discretionary spending was fully funded.<\/p>\n Share<\/a><\/p>\n Updated at\u00a003.35 EDT<\/p>\n China on track for record trade surplus this year<\/p>\n China is on track to post a record high trade surplus this year, after exports soared in September.<\/p>\n New trade data shows that China\u2019s exports soared by 36.3% year-on-year last month, the fastest monthly increase since February.<\/p>\n Imports jumped by 31.0%.<\/p>\n This pushed September\u2019s trade surplus to $133.53bn, meaning China has now recorded a surplus of $938bn over the first nine months of this year.<\/p>\n That indicates the total surplus for 2026 could come in above the record $1.189tn recorded in 2025.<\/p>\n ING economist Lynn Song says:<\/p>\n double quotation markChina\u2019s exports, imports, and trade surplus all comfortably beat expectations in September as the trade boom continued. Key trade ties look set to remain stable through year-end, which should keep this year\u2019s key growth engine humming.<\/p>\n Share<\/a><\/p>\n Tim Jones, policy director at Debt Justice, has welcomed Ed Miliband\u2019s call for a \u2018new deal\u2019 on debt for emerging economies<\/a>:<\/p>\n double quotation mark\u201cWe welcome Ed Miliband\u2019s commitment to action on debt during the UK G20 Presidency. He is right that the debt relief system urgently needs an overhaul. This must include deeper debt relief, a suspension of payments during negotiations and measures to ensure private lenders participate.\u201d<\/p>\n \u201cCrucially, private lenders must share the cost of debt relief schemes. Otherwise public money will just bail out private lenders rather than be used for investment.\u201d<\/p>\n Share<\/a>Ed Miliband: Global financial system is failing developing countries Ed Miliband is due to speak at the IMF meeting today, and our economics editor Heather Stewart has the inside line on his plans:<\/p>\n The foreign secretary, Ed Miliband<\/a>, will claim the global financial system is failing developing countries, as he calls for a \u201cnew deal\u201d for governments struggling under the burden of debt.<\/p>\n Promising to throw the UK\u2019s diplomatic weight behind urgent reform, he will evoke the example of the Gleneagles summit under the last Labour government in 2005 \u2013 the culmination of the Make Poverty History campaign.<\/p>\n \u201cThe global financial system and indeed the global order is failing to serve developing countries on debt, on resilience and on climate. This is not just against our values but against our national interest,\u201d Miliband is expected to say.<\/p>\n double quotation mark\u201cIn the interconnected world we live in, more than ever, the opportunities and challenges we confront are collective.\u201d<\/p>\n Speaking in Bangkok on Wednesday, he will call for the World Bank<\/a> and other multilateral development banks (MDBs) to use the resources they have available to lighten the load for governments trapped by hefty borrowing costs.<\/p>\n \u201cWe need action on developing country debt through the MDBs,\u201d he is expected to say.<\/p>\n double quotation mark\u201cAction that leverages the balance sheets of the international financial institutions to support these countries to repay over longer time horizons, and crucially, refinancing, with better rates, to give them precious fiscal space.\u201d<\/p>\n Here\u2019s the full story:<\/p>\n Share<\/a>Not building third runway would be ‘huge missed opportunity’, Heathrow boss claims<\/p>\n Away from the IMF meeting, the boss of Heathrow airport has claimed it would be a \u201chuge missed opportunity\u201d not to build a third runway.<\/p>\n Thomas Woldbye told BBC Radio 4\u2019s Today programme it would be \u201cgood to know\u201d the government\u2019s position on the project, after prime minister Andy Burnham refused to say whether he backed expansion.<\/p>\n Woldbye, who is due to appear before parliament\u2019s transport committee today to discuss the issue, warned that Heathrow\u2019s shareholders will invest elsewhere in the world if the third runway is blocked, rather than in the UK, arguing:<\/p>\n double quotation mark\u201cIt\u2019s not about allocating this money elsewhere. It\u2019s private money. It\u2019s not public money. So hence, it will not go into the UK. I think that would be really a sad, huge missed opportunity for this country.\u201d<\/p>\n Share<\/a>BoE’s Pill wary of predictions of four rate rises<\/p>\n Elsewhere in Bangkok, Bank of England chief economist Huw Pill has suggested that the financial markets may be getting carried away by anticipating four increases in UK interest rates over the next year.<\/p>\n Speaking on the sidelines of the IMF\u2019s meeting, Pill said:<\/p>\n double quotation mark\u201cIs it obvious that we will need to move, follow market pricing to four 25 basis-point hikes and so forth? So there, I would be a little bit more sceptical.<\/p>\n \u201cI think it is important we get ourselves in the right position. I think we have some work to do there. I think that is something that probably is increasingly obvious now. But is four hikes appropriate over the next year?\u201d<\/p>\n Looking at the market pricing this morning, a rate rise in November looks very likely (a 92% chance). The markets then expect three further rate rises by next September.<\/p>\n Share<\/a>Bank of England governor and IMF warn of rising cyber risks Bank of England governor Andrew Bailey and IMF managing director Kristalina Georgieva have issued a stark warning about the growing risks of cyber-attacks in the age of AI.<\/p>\n Georgieva cited her childhood growing up in Eastern Europe, when wary citizens didn\u2019t trust the system, so kept their money in a shoebox under the bed.<\/p>\n She warned:<\/p>\n double quotation mark\u201cWhat I worry, today, is that unless we figure out how to get ahead of this curve, given the speed, the scale and the cost of fraud growing [going] up, we may end up with lots of people with shoeboxes under their beds.\u201d<\/p>\n Bailey agreed, citing a warning from Anthropic this week that rogue AI agents may \u2018self-replicate\u2019 to hijack everyday devices.<\/a><\/p>\n \u201cIf you try to say what\u2019s at the heart of this debate about AI? For me, it\u2019s about trust in technology and it\u2019s about human control to achieve that trust in technology,\u201d he said, adding:<\/p>\n double quotation mark\u201cI\u2019m going to use a sports metaphor for a moment. I think this technology, you know, is arming the offence, but it can also arm the defence as well.\u201d<\/p>\n And he called for big tech firms to take more responsibility for fraud committed via their platforms. Contrasting their status today with the legal status in the UK of outlets such as newspapers, which are responsible for everything they publish, he said:<\/p>\n double quotation mark\u201cWe\u2019ve moved into quite an extreme position of, well, these platforms are open to everybody and there\u2019s no real liability to the provision of the platform to what\u2019s on it. Guess what? Everything\u2019s on it. you know, the good, the bad and the incredibly ugly and and downright criminal and terrible.\u201d<\/p>\n Bank of England (BoE) Governor Andrew Bailey speaks as he attends the \u201cBangkok Blueprint for Fraud-Resilient Financial Services today Photograph: Athit Perawongmetha\/Reuters<\/p>\n He added,<\/p>\n double quotation mark\u201cI don\u2019t go around pointing the finger at people and saying, \u2018you are bad\u2019.<\/p>\n What I have said is, look, there is responsibility all around. And we need to evolve to a world where everybody understands this responsibility, and everybody is then a part of addressing the problem, because we this cannot be done by by finance alone, given the media that are being used now.<\/p>\n We\u2019ve said, \u2018look, we\u2019re all in this together.\u2019 The companies that are providing the big tech platforms, the ones we all know, the household names globally, you\u2019ve got to be part of this.\u201d<\/p>\n The pair were speaking on a panel to launch a \u201cBangkok blueprint for fraud resistance financial services\u201d at the IMF\/World Bank annual meetings.<\/p>\n Share<\/a><\/p>\n Updated at\u00a002.46 EDT<\/p>\n IMF’s Georgieva urges US to get its house in order Wednesday morning at the IMF\/World Bank annual meetings in Bangkok saw IMF managing director Kristalina Georgieva give her opening press conference, our economics editor Heather Stewart writes.<\/p>\n She enthusiastically reiterated the IMF\u2019s call for major economies – including the US – to implement tougher fiscal policies. \u201cMake urgent repairs to the fiscal house, before the cracks widen,\u201d she said – and later:<\/p>\n double quotation mark\u201cFundamentals matter. Get your house in order. Otherwise, your people, your businesses will pay a price.\u201d<\/p>\n She highlighted the imbalances between countries with big trade and fiscal surpluses – including China – and those with deep deficits, such as the US.<\/p>\n double quotation mark\u201cSurplus countries need to increase domestic consumption. Deficit countries need to save more, cut debt, cut the deficits over time.\u201d<\/p>\n Georgieva was also asked about fiscal conditions in Europe – including France\u2019s budget predicament; and why the UK\u2019s bond yields remain so high, despite having a plan to cut its deficit – which the IMF has praised this week.<\/p>\n On the UK, she said:<\/p>\n double quotation mark\u201cwe need to recognise that it is not just a systemically important, signficant economy, but London is one of the capitals of the world for the finance community. And traditionally we have seen more attention in relative terms in the UK to what the government is doing, what is happening – a bit more sensitivity.\u201d<\/p>\n She added:<\/p>\n double quotation mark\u201cI think the UK government knows they need to stay the course: they need to reaffirm this confidence in the direction of travel.\u201d<\/p>\n On France, she insisted she was \u201cpositive,\u201d about the government\u2019s prospects of passing a budget that reduces future deficits and might reassure financial markets; but suggested the country\u2019s travails were having knock on effects.<\/p>\n She says:<\/p>\n double quotation mark\u201cWe are seeing, across the eurozone, an impact in terms of yields edging upwards, even in countries that traditionally never see their yields move.\u201d<\/p>\n Share<\/a><\/p>\n Pressure to increase defence spending is another factor pushing up government borrowing \u2013 and European countries may need to fund it through spending cuts rather that higher taxes or borrowing, the Fund indicated.<\/p>\n Speaking today in Bangkok, Rodrigo Valdes, head of the IMF\u2019s fiscal affairs department, told reporters:<\/p>\n double quotation mark\u201cI think what countries should do from the macro perspective depends a lot in terms of their initial position. In general, however, the the defence spending will be persistent, so even if you accommodate it temporarily with debt, you have to be prepared at some point to recognise that that debt cannot forever finance this part.<\/p>\n And the second issue is that…in general, Europe has really high revenue ratios. So the space for a lot more revenues is not easy: it distorts, at the end of the day. So, the discussion about the social contract behind spending is very, very urgent.\u201d<\/p>\n Valdes\u2019s colleague Era Dabla-Norris warned:<\/p>\n double quotation mark\u201cGiven the fact that many of these spending pressures are going to be persistent, there are going to be difficult trade-offs, and countries are going to have to assess carefully, in communication and dialogue and discussion with the public, in terms of what the priorities are, what needs to come first, and what governments need to spend on.\u201d<\/p>\n![\"Heather](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/10\/Heather_Stewart,_L.png\")
Heather Stewart<\/p>\nHeather Stewart<\/p>\nHeather StewartDirector Kristalina Georgieva speaks at a news conference on the Global Policy Agenda forum during the annual meetings of the International Monetary Fund and the World Bank Group in Bangkok, Thailand, this morning Photograph: Sakchai Lalit\/AP<\/p>\n