British Finance Minister John Healey is set to call on the world’s largest economies to strengthen their public finances and establish credible strategies for reducing government borrowing as rising geopolitical tensions, inflation and debt-servicing costs threaten economic stability.
Healey will make the case during his first visit to the International Monetary Fund’s annual meetings this week, where finance ministers and central bank governors are gathering to assess the impact of the expanding US-Iran war, volatile energy markets and growing pressure on public budgets.
“ I will work with our international partners to keep trade moving, support families and businesses, and make Britain's economy stronger and more resilient,” Healey said in a statement issued by his office.
According to the UK Treasury, Healey will emphasise that major economies must develop credible plans to bring borrowing under control while strengthening their ability to withstand external economic shocks. His position follows similar warnings from IMF Managing Director Kristalina Georgieva and Bank of England Governor Andrew Bailey about mounting debt and risks to global growth.
The meetings, taking place in Bangkok, come as governments face a difficult combination of higher energy prices, persistent inflationary pressures and rising borrowing costs. Financial markets have increasingly priced in the possibility of higher interest rates as investors assess the economic consequences of the US-Iran conflict and the growing debt burdens of major economies.
Healey is also expected to meet Ukrainian Finance Minister Sergii Marchenko and other international counterparts to discuss economic resilience and cooperation amid heightened geopolitical uncertainty.
The discussions will be particularly significant for Britain, where Healey faces mounting pressure to balance fiscal restraint with demands for greater defence expenditure and measures to ease energy costs.
He has pledged to maintain “fiscal discipline” in his first annual budget, scheduled for October 28. However, higher government debt interest payments and rising spending requirements are complicating efforts to keep borrowing reduction plans on track.
The scale of the challenge was highlighted by the Institute for Fiscal Studies, which estimates that Healey could need to raise taxes by £36 billion to fully compensate for inflation-driven pressure on public finances and accommodate additional defence spending. The sum is equivalent to increasing the main rate of income tax by three percentage points.
The government must therefore weigh difficult choices over taxation, public spending and borrowing as it attempts to preserve economic stability while responding to growing security and cost-of-living pressures.
Healey’s message at the IMF meetings is expected to reflect a broader international concern: governments need sufficient fiscal capacity to respond to future crises, but persistently high borrowing and rising debt-servicing costs are reducing their room for manoeuvre.
