UK finance minister to call for big economies to get borrowing under control at IMF

John Healey is asking major economies to show clearly how they will reduce or control government borrowing. His message is about budget discipline: governments should not allow debt and borrowing costs to rise without a credible plan. This matters because investor concerns about borrowing, inflation, and interest rates have already pushed government borrowing costs sharply higher.

The article gives Britain as a direct example. Healey says he will deliver fiscal discipline in his October 28 budget. He must keep plans to lower borrowing on track while facing higher debt interest costs and pressure to spend more on defence and reduce energy costs. A credible plan could involve tax increases, spending restraint, or both.

The issue is international, not just British. IMF Managing Director Kristalina Georgieva and Bank of England Governor Andrew Bailey made similar calls recently. Healey will press the case during meetings in Bangkok, while also discussing resilience with partners including Ukraine's finance minister.

The IMF, or International Monetary Fund, is an international institution that works with countries on economic stability, financial cooperation, and difficult balance-of-payments problems. The source does not define the IMF, but it identifies the organisation as a central forum for finance ministers and central-bank chiefs. Their discussions matter because national economies are affected by shared pressures, including inflation, interest rates, trade, and conflict.

The IMF and World Bank are holding annual meetings in Bangkok this week. Ministers and central-bank leaders will discuss the widening war in the Middle East and its effects on energy prices and inflation. These meetings allow officials to compare risks, exchange policy ideas, and work with international partners rather than responding in isolation.

Healey is attending his first IMF annual meetings. He will argue for credible borrowing plans, seek continued trade, and discuss resilience with Ukrainian Finance Minister Sergii Marchenko. The meetings therefore connect immediate crisis management with longer-term economic resilience.

Britain's Institute for Fiscal Studies estimates that Healey may need £36 billion in tax rises. The increase would be needed if the government wants to fully offset the erosion of its budgets caused by higher inflation and also fund extra defence spending. That is a substantial fiscal challenge because it requires raising significant additional revenue while the economy faces other pressures.

The article gives a striking comparison: £36 billion is equivalent to increasing the main rate of income tax by three percentage points. This does not mean the government has chosen that exact measure. It shows the scale of the tax increase that could theoretically produce a similar amount of revenue. The government could consider different tax choices instead.

The estimate shapes the October 28 budget. Healey has promised fiscal discipline, but he also faces higher debt interest costs, defence demands, and pressure to reduce energy costs. Those competing priorities make the final tax and spending decisions especially important.

Major economies faced their highest government borrowing costs in decades because investors saw several risks arriving together. The article identifies inflation linked to the US-Iran war, already high levels of government borrowing, and the need for higher interest rates. Together, these concerns made government debt less attractive or more expensive to finance.

The key mechanism is straightforward. War can push energy prices higher, and higher energy prices can intensify inflation. Investors then expect interest rates to remain higher or rise further. Governments must pay more when they borrow or refinance debt in that environment. Large existing borrowing makes the effect more significant because more debt is exposed to costly financing.

These pressures are influencing Healey's message at the IMF meetings. He wants major economies to present credible plans to control borrowing. Britain faces the same challenge, with higher debt interest costs competing against planned spending on defence and measures to reduce energy costs.

War-driven energy-price increases make borrowing control harder through two pressures. First, they can raise inflation across the economy. Second, higher inflation can lead investors and central banks to expect higher interest rates. Governments then face more expensive debt interest payments, leaving less room in their budgets to reduce borrowing.

The article also points to a spending dilemma. Healey wants Britain to keep trade moving and support families and businesses. He faces pressure to reduce energy costs, while also increasing defence spending. If the government responds to expensive energy with financial support, that can require more public spending. If it instead accepts the full shock, households and businesses may face greater strain.

This combination complicates Britain's plans to lower borrowing. Higher debt interest costs consume more resources just as geopolitical risks create new spending needs. Healey will therefore argue for fiscal discipline and resilience, while the Bangkok meetings examine the wider effects of war on energy prices and inflation.

Governments generally have two main budget levers when they want to control borrowing: raise more revenue or spend less. They can increase taxes, reduce planned spending, delay projects, or combine several measures. The aim is to narrow the gap between public income and spending, making it easier to reduce borrowing over time.

Britain's situation shows why the choice is difficult. The Institute for Fiscal Studies estimates £36 billion in tax rises may be needed to offset higher inflation's damage to budgets and fund extra defence spending. At the same time, Healey faces higher debt interest costs and pressure to reduce energy costs. Cutting spending could protect the borrowing target, but it might conflict with defence or support priorities.

Healey has promised fiscal discipline at the October 28 budget. The government must decide how much adjustment should come from taxes and how much from spending. Whatever mix it chooses, the article indicates that credible action is needed to keep borrowing plans on track.

High government debt makes a country more exposed because interest payments can rise when borrowing becomes more expensive. A government with substantial debt may need to devote more of its budget to servicing that debt. This leaves less money for public services, defence, household support, or measures to reduce energy costs. The source directly highlights higher debt interest costs as a British pressure.

Geopolitical shocks add a second vulnerability. Conflict can raise energy prices and inflation while creating demands for higher defence spending or other support. The article says Britain wants to spend more on defence and reduce energy costs as borrowing costs are already elevated. Those needs can arrive suddenly, when the budget has little spare room.

That is why Healey stresses resilience as well as discipline. Major economies are being urged to create credible borrowing plans. Without them, higher interest costs and new crisis spending could push borrowing further upward, making future budgets harder to manage.