Britain’s finance minister, John Healey, is set to urge major economies to bring government borrowing under control as rising debt-servicing costs and geopolitical tensions put public finances under increasing pressure. Speaking during this week’s International Monetary Fund and World Bank annual meetings in Bangkok, Healey is expected to emphasize fiscal discipline and stronger economic resilience at a time when higher energy prices and inflation concerns are pushing borrowing costs upward across global markets.

Rising Borrowing Costs Put Fiscal Policy Under Pressure

Healey’s message comes as government bond yields across major economies have climbed to levels not seen in decades. Investors are demanding higher returns amid concerns about persistent inflation, expanding public debt and the economic consequences of the conflict involving the United States and Iran. Higher yields increase the cost of financing government deficits and refinancing maturing debt, leaving policymakers with less room to fund public services, infrastructure and defense without raising taxes or cutting expenditure.

The pressure extends beyond the United Kingdom. Major economies face the challenge of balancing demands for public investment and security spending against the need to maintain credible fiscal positions. If governments continue borrowing heavily while inflation remains elevated, bond markets may demand additional compensation for the risks involved. That could create a feedback loop in which higher interest payments further weaken public finances and complicate efforts to stabilize debt.

UK Budget Faces Difficult Choices

For Healey, the international message is closely connected to domestic fiscal constraints. He is preparing to deliver his first annual budget on October 28, with the government seeking to keep its borrowing-reduction plans on track despite higher debt interest costs and pressure to increase defense spending and reduce energy costs for households.

The Institute for Fiscal Studies estimates that the government could need £36 billion in tax increases to fully offset the erosion of public spending capacity caused by higher inflation and finance additional defense commitments. The scale of the potential adjustment highlights the limited room for maneuver available to the Treasury. Tax increases could strengthen the public finances but risk weighing on household disposable income and business activity. Spending cuts, meanwhile, could constrain public services or delay investment at a time when economic resilience is a stated priority.

IMF Meetings Focus on Global Economic Resilience

Healey’s call follows similar warnings from IMF Managing Director Kristalina Georgieva and Bank of England Governor Andrew Bailey, both of whom have stressed the importance of credible fiscal management. The annual meetings provide an opportunity for finance ministers and central bank officials to discuss how governments can respond to geopolitical shocks without allowing debt and inflation risks to become entrenched.

Healey has said he intends to work with international partners to keep trade moving, support households and businesses, and strengthen the UK economy. His meetings, including discussions with Ukrainian Finance Minister Sergii Marchenko, are also expected to address economic resilience amid ongoing geopolitical uncertainty.

Markets will watch whether the meetings produce a clearer international commitment to fiscal restraint and whether the UK budget sets out measures that investors consider credible. Inflation, energy prices, bond yields and the government’s ability to meet its fiscal targets will remain central indicators. The challenge for policymakers is to contain borrowing without undermining growth, particularly as geopolitical risks continue to raise the cost of energy and public financing.