08.08 CEST Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

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.

In its new fiscal monitor report, released this morning, the 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.

And it is demanding action, warning that “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. 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.

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 over 1 percentage point, reaching its highest level in nearly two decades.

Photograph: IMF 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. Or, as the puts it: In 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.

Higher benchmark yields in major economies can also spill across borders, worsening debt dynamics elsewhere.

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.

It’s worse for low-income countries, where interest payments today consume over 15% of tax revenues.

The agenda 9am BST: IEA oil market report 9am BST: Foreign secretary Ed Miliband speaks at the IMF Annual Meeting in Bangkok 9.15am: Treasury select committee hearing on Heathrow expansion plans 1.30pm US inflation report for September 2.15pm Treasury Committee hearing on the Budget 2026 Key events 6m ago 08.22 CEST IMF's Georgieva urges US to get its house in order Heather Stewart Director 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 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.

She enthusiastically reiterated the IMF’s call for major economies - including the US - to implement tougher fiscal policies.

“Make urgent repairs to the fiscal house, before the cracks widen,” she said - and later: “Fundamentals matter. Get your house in order. Otherwise, your people, your businesses will pay a price.”She highlighted the imbalances between countries with big trade and fiscal surpluses - including China - and those with deep deficits, such as the US.

“Surplus countries need to increase domestic consumption. Deficit countries need to save more, cut debt, cut the deficits over time.”Georgieva was also asked about fiscal conditions in Europe - including France’s budget predicament; and why the UK’s bond yields remain so high, despite having a plan to cut its deficit - which the IMF has praised this week. On the UK, she said: “we 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.”She added:

“I think the UK government knows they need to stay the course: they need to reaffirm this confidence in the direction of travel.”On France, she insisted she was “positive,” about the government’s prospects of passing a budget that reduces future deficits and might reassure financial markets; but suggested the country’s travails were having knock on effects. She says: “We are seeing, across the eurozone, an impact in terms of yields edging upwards, even in countries that traditionally never see their yields move.” 12m ago 08.15 CEST Pressure to increase defence spending is another factor pushing up government borrowing – and European countries may need to fund it through spending cuts rather that higher taxes or borrowing, the Fund indicated. Speaking today in Bangkok, Rodrigo Valdes head of the

fiscal affairs department, told reporters: “I 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.

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.”colleague Era Dabla-Norris

warned: “Given 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.”

Introduction: IMF sounds alarm over rising government borrowing costs