The jump in government borrowing costs this year is causing concern at the International Monetary Fund, as policymakers gather in Bangkok for its annual meeting.
In its fiscal monitor report, released this morning, the IMF is warning that the rise in sovereign bond yields has “raised the fiscal stakes” facing governments, as they try to keep borrowing under control.
Higher borrowing costs are adding to fiscal pressures at a time of high debt, making credible consolidation more urgent, it points out.
It is demanding action, saying: “The more countries wait, the more painful the adjustment becomes.”
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. In the UK the chancellor, John Healey, could face a battle with his own MPs if he proposes welfare cuts in his budget later this month.
The IMF points out that since February – when the Iran war began and oil prices jumped – the average 10-year government bond yield for G7 countries increased by more than one percentage point, reaching its highest level in almost two decades.
The Bank of England governor, Andrew Bailey, and the IMF managing director, Kristalina Georgieva, have issued a stark warning about the growing risks of cyber-attacks.
Georgieva cited her childhood growing up in eastern Europe, when wary citizens did not trust the system, so kept their money in a shoebox under the bed.
She said: “What 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 up, we may end up with lots of people with shoeboxes under their beds.”
Bailey agreed, citing a warning from Anthropic this week that rogue AI agents may “self-replicate” to hijack everyday devices.
“If you try to say what’s at the heart of this debate about AI? For me, it’s about trust in technology and it’s about human control to achieve that trust in technology,” he said.
“I’m 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.”
Today’s key events
• 9am BST: IEA oil market report
• 9am BST: the UK’s foreign secretary, Ed Miliband, speaks at the IMF annual meeting in Bangkok
• 9.15am BST: Treasury select committee hearing on Heathrow expansion plans
• 1.30pm BST: US inflation report for September
• 2.15pm BST: Treasury committee hearing on the budget 2026
We’ll be tracking all the main events throughout the day on our business live blog …
