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The head of the IMF has revealed that worries about a crisis in the private credit market keeps her awake at night,<\/a> and called for more vigilance of the sector.<\/p>\n UK chancellor Rachel Reeves has told reporters that \u201cthose with the broadest shoulders should pay their fair share of taxes,\u201d<\/a> in a new hint that some taxes will rise in next month\u2019s budget.<\/p>\n Reeves also said she would like more headroom to keep within her fiscal rules<\/a>, but pointed out that \u201cthat comes with trade-offs.\u201d<\/p>\n The UK economy has returned to growth, with a 0.1% rise in GDP in August<\/a>.<\/p>\n Unimpressed economists said the increase was \u2018meagre\u2019<\/a>, and showed the economy was stumbling ahead of the budget.<\/p>\n Nestle has announced plans to cut 16,000 jobs.<\/a><\/p>\n Share<\/a>Reeves: UK seeks pharma investment as part of US deal<\/p>\n Chancellor Rachel Reeves<\/a> also told reporters today that the UK wants to see more investment in the country by pharmaceutical companies if it agrees to pay higher drug prices as part of tariff talks with the United States.<\/p>\n Reeves explained that the government was working \u201cvery closely\u201d with the pharmaceutical industry and the United States in relation to talks to secure lower tariffs for the sector, but acknowledged their businesses\u2019 concerns about the low prices paid for drugs by Britain\u2019s public health service and other issues.<\/p>\n She said:<\/p>\n \u201cWe do need to make sure that we are an attractive place for pharmaceuticals, and that includes on pricing, but in return for that, we want to see more investment flow to Britain.<\/p>\n \u201cWe\u2019ve been very successful with the U.S. in terms of negotiating lower tariffs … and of course, we want that to be the case with pharmaceuticals as well. But we are in the middle of those negotiations at the moment.\u201d<\/p>\n Drug pricing has become a hot topic in recent weeks as major pharmaceutical companies ditched or paused almost \u00a32bn in planned UK investments<\/a>, amid claims that the British government was not spending enough on new medicines.<\/p>\n Share<\/a>BoE’s Mann warns of risk UK inflation stays above target<\/p>\n News is being committed across the IMF\u2019s annual meeting today.<\/p>\n Bank of England rate-setter Catherine Mann has warned there is \u201cvery clear upside evidence\u201d that UK inflation could remain above the central bank\u2019s 2% target for longer.<\/p>\n Mann, a member of the Bank\u2019s monetary policy committee, said monetary policy needs to remain tight to rein in climbing household inflation expectations that threaten to keep price pressures elevated if they spill over into demands for higher pay.<\/p>\n \u201cThere is downside risk,\u201d she told an Institute of International Finance event in Washington, pointing to \u201cmodest\u201d growth at best and a softening labor market.<\/p>\n However, she added:<\/p>\n \u201cThere is very clear upside evidence of inflation being above target, staying sustained above target.\u201d<\/p>\n Bloomberg has more details, here<\/a>.<\/p>\n Share<\/a>Georgieva: Gaza ceasefire could yield wider peace dividend<\/p>\n International Monetary Fund managing director Kristalina Georgieva has called for the Gaza ceasefire to be maintained, as a lasting peace would benefit the entire region.<\/p>\n Georgieva told reporters she was relieved when the recent ceasefire was reached for the sake of all the people affected by the two-year war in the Palestinian enclave.<\/p>\n She said lowered tensions would be good news for the economies of Egypt and Jordan, where the IMF has programs, and Lebanon and Syria, which have asked for help and support from the global lender.<\/p>\n She explains:<\/p>\n \u201cIt is important because everybody concerned encourages this direction of sustaining a lasting peace, and yes, it would benefit the region. There will be a peace dividend for everybody.\u201d<\/p>\n Georgieva said the IMF was working with Lebanon, which has asked for a loan program. \u201cI hope we will be able to come up with a program,\u201d she said.<\/p>\n Share<\/a>IMF chief reveals worries about private credit market keep her awake at night<\/p>\n The head of the IMF has revealed that worries about a crisis in the private credit market keeps her awake at night, sometimes.<\/p>\n Kristalina Georgieva was asked at today\u2019s press briefing whether she is concerned about the health of the private credit markets, following the collapse of US auto parts supplier First Brands and car dealership Tricolor in recent weeks.<\/p>\n Those failures prompted the boss of JP Morgan, Jamie Dimon, to warn this week that more \u201ccockroaches\u201d could emerge from the private credit sector.<\/p>\n Q: Is this a concern for you about the health of the credit market \u2013 could it boil over into a crisis? How prepared is the world to cope with another crisis?<\/p>\n Georgieva replies that the IMF is \u201cconcerned\u201d, which it made clear in the financial stability report it issued this week.<\/p>\n She says there has been a \u201cvery significant shift of financing\u201d from the banking sector to non-bank financial institutions, to a point where more than half of financing is now there.<\/p>\n Those non-bank financial institutions do not enjoy the same level of regulatory oversight as the banks do, creating a risk of ending up in \u201ca difficult place\u201d if the sector grows significantly.<\/p>\n The scale of any problem depends on two things, she continues:<\/p>\n 1) the performance of the real economy<\/p>\n 2) \u201cthe magnitude of non-banking financial institutions that find themselves in a tough spot\u201d.<\/p>\n Georgieva declares:<\/p>\n This is why we are urging more attention to the non-bank financial institutions. We are asking the question, what should be done to have more oversight and a better view of what is happening there.<\/p>\n You are asking the question that keeps me awake every so often at night.<\/p>\n Georgieva insists, though, tht the world is not in the situation it faced at the start of the global financial crisis \u2013 there are better policy frameworks across the globe, and systemically significant economies have accumulated massive reserves to cope with problems.<\/p>\n But, she cautions that countries have exhausted their fiscal buffers, while central banks are still battling inflation.<\/p>\n She adds, though, that there aren\u2019t many \u2018cockroaches\u2019 scurrying around yet, telling reporters:<\/p>\n In this environment, of course, the security blanket is covering us, but maybe we have a foot out in the cold. We have to be vigilant. What do we do? We watch it very carefully.<\/p>\n Stretched valuations are a reality. AI has created this enthusiasm. If this bet pays off we are in a very good place, but what if it doesn\u2019t or if it doesn\u2019t fast enough?<\/p>\n You are right to be putting this question to us. I can tell you that we are very watchful on developments.<\/p>\n So far, so far, not that many cockroaches.<\/p>\n Share<\/a><\/p>\n Updated at\u00a009.23 EDT<\/p>\n Asked about the situation in Senegal, Kristalina Georgieva says she gives \u201cfull credit\u201d to the Senegalise authorities for recognising that government debt levels had been misreported (by billions of dollars<\/a>)<\/p>\n \u201cDebt was hidden, and they bought it to light,\u201d she explains.<\/p>\n Georgieva adds that she had a very constructive discussion with Senegal at the IMF, and is pleased that there is now clarity about the issue.<\/p>\n Share<\/a>Georgieva: China has reached a fork in the road<\/p>\n Asked about China\u2019s economy, Kristalina Georgieva says China is still expected to grow faster than the global average.<\/p>\n She then says China faces \u201ca fork in the road\u201d \u2013 whether to continue with its old, export-oriented growth model, or focus to a more domestic-consumption driven economy.<\/p>\n That means China must do three things<\/p>\n Resolve problems in its real estate sector, which are hurting consumer confidence<\/p>\n increase social safety nets, by redirecting money being used to subsidise industry<\/p>\n open up markets that are less-open today, such as services, education and healthcare<\/p>\n Share<\/a>Georgieva: US, France, Italy, and Japan must tackle fiscal consolidation<\/p>\n Q: How does the IMF view the fiscal health of the G7? And how about Canada specifically?<\/p>\n IMF managing director Kristalina Georgieva says the build-up of debt is being driven primarily by advanced economies, and by emerging markets (so not low-income countries as it\u2019s hard for them to tap more borrowing).<\/p>\n Some of those advanced economies have more fiscal problems than others, she says.<\/p>\n In one corner, we have the US, France, Italy, and Japan where there is need for fiscal consolidation, she explains, adding;<\/p>\n \u201cThe good news is that they all recognise this need.\u201d<\/p>\n [however, France for example has faced massive political challenges in doing this\u2026]<\/p>\n On the other side, there are countries who are in a better position \u2013 Germany and Canada. says Georgieva, adding:<\/p>\n \u201cBoth Germany and Canada recognise that in this very testing time they need to use their fiscal space.\u201d<\/p>\n She says that in the case of Germany, this extra spending is beneficial for Germany and the E union and the rest of the world.<\/p>\n She also says the IMF very much welcomes the changes Canada is making, followinng the changes in their relationship with the US, including modernising the budget framework to split operating expenditive from investment.<\/p>\n [Alas, Georgieva doesn\u2019t say which bucket the UK falls into\u2026.]<\/p>\n Share<\/a><\/p>\n Kristalina Georgieva then asks those at today\u2019s press briefing who use AI tools to raise their hands \u2013 and most of the attendees do!<\/p>\n Photograph: IMFShare<\/a><\/p>\n Updated at\u00a008.27 EDT<\/p>\n Georgieva: Countries must act fast to prepare for AI<\/p>\n IMF managing director Kristalina Georgieva is now taking questions:<\/p>\n Q: How big a role is the AI investment boom playing in the resilience of the global economy?<\/p>\n \u201cExcellent question\u201d, replies Georgieva approvingly. She says the AI investment boom is bringing \u201cincredibly optimism\u201d, mainly concentrated in the US.<\/p>\n Bu, she says, there are two things AI needs to work.<\/p>\n First: energy, where AI\u2019s demand is equivalent of half the energy consumption of the US.<\/p>\n Second: How will AI transform the rest of the economy? It will only be valuable if it makes a major contribution to productivity and growth, Georgieva says.<\/p>\n She adds:<\/p>\n We have done our assessment. Or view at this point is that AI will indeed contribute to growth, somewhere beween 0.1% and 0.8%<\/p>\n This is significant, Georgieva insists, as global growth is currently stuck at around 3%. If AI can contribute that extra growth it would be \u201cvery significant for the world\u201d.<\/p>\n But\u2026 the IMF is urging members to prepare for this AI revolution.<\/p>\n Georgieva warns:<\/p>\n The risk we see is that we may end up in a world where there is increased productivity, but it is also a source of divergence within countries and across countries.<\/p>\n Preparedness really matters. It is happening fast, so we don\u2019t really have much time as societies to be ready for AI.<\/p>\n Share<\/a>Georgieva: China should boost domestic demand, US should cut its deficit.<\/p>\n IMF chief Kristalina Georgieva then explains that the main priority is to guard against financial instability.<\/p>\n She says that countries with excessive surpluses like China should boost domestic demand, including by spending less on industrial policy and more on social safety nets.<\/p>\n At the other end of the ledger, countries with excessive deficits such as the US need to reduce fiscal deficits and incentivize private savings.<\/p>\n Share<\/a><\/p>\n People are anxious, they are taking to the streets to demand better opportunities, IMF chief Kristalina Georgieva points out.<\/p>\n She says the IMF is urging its members to keep trade as an engine of growth.<\/p>\n Share<\/a>IMF’s Georgieva: Situation is better then feared, but worse than needed<\/p>\n In the halls of the IMF\u2019s headquarters, managing director Kristalina Georgieva is holding a briefing with the press now.<\/p>\n Georgieva begins by reminding journalists that when policymakers gathered in Washington DC six months ago there was \u201ca lot of anxiety about the state of the global economy\u201d.<\/p>\n Then, the IMF was forecasting a sharp slowdown (but not a recession).<\/p>\n Six months on where do we stand?<\/p>\n \u201cBetter then feared, but worse than needed,\u201d Georgieva says.<\/p>\n \u201cUncertainty has continued to go up, up, up\u201d she warns, pointing towards the ceiling to emphasise the point.<\/p>\n But despite this, global growth has held \u201cfairly steady\u201d. Growth is projected to slow from 3.3% last year to 3.2% this year and 3.1% in 2026.<\/p>\n Georgieva says:<\/p>\n \u201cThat\u2019s better than we feared, and better than we projected six months ago.\u201d<\/p>\n She says there are two reasons.<\/p>\n First, \u201cimproved policy fundamentals\u201d. Since the financial crisis, many economies especially emerging markets have pursued sound policies, and strengthened their institutions and frameworks, Georgieva explains. \u201cThis investment is paying off \u2013 and if I may say, stay the course.<\/p>\n Seconly, the private sector has shown \u201cquite remarkable\u201d agility in coping with challenges, such as in supply chain flexibility and front-loading imports to protect themselves from trade wars.<\/p>\n Overall, Georgieva cautions that \u201cthe outlook is underwhelming\u201d. Medium-term growth prospect remain weak, public debt near record highs and continues to climb, and the global economy is excessively imbalanced, she explains.<\/p>\n Share<\/a>Reeves: I’d like more budget headroom, but there are trade-offs The chancellor then confirmed that she would like to use the budget to build up more headroom against her fiscal rules – but stressed that this would be difficult, because it requires higher taxes or deeper spending cuts.<\/p>\n She told UK journalists in Washington, D.C.:<\/p>\n \u201cIf you\u2019re asking me would I like more headroom, of course I would, but that comes with trade-offs.\u201d<\/p>\n Pointing to jittery bond markets, she said, \u201ca greater buffer against that volatility would be helpful.\u201d<\/p>\n [Reminder, we reported last week that the chancellor was looking for extra headroom in the budget, to provide a larger cushion to keep within her fiscal rules]<\/p>\n Share<\/a><\/p>\n Updated at\u00a007.46 EDT<\/p>\n Reeves: Want to ensure Britain is a great place to do business<\/p>\n Reeves was also asked whether she would levy new taxes on banks in the budget.<\/p>\n In reply, she stressed the importance of maintaining a competitive environment, saying:<\/p>\n \u201cWe want to make sure that Britain is a great place to do business and to bring in business. Financial services is one of our success stories in the UK.\u201d<\/p>\n Confronted with research from UK Finance suggesting UK banks are already more heavily taxed than their rivals<\/a>, she did not demur.<\/p>\n![\"Heather](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/10\/1760636654_77_Heather_Stewart,_L.png\")
Heather Stewart<\/p>\n