UK and US warned to take action on spiralling debt costs by IMF

International Monetary Fund managing director Kristalina Georgieva has urged wealthy nations, including Britain and the United States, to borrow less and bring down public debt. She spoke in New York City during the UN General Assembly after several weeks of rising state borrowing expenses.

The warning comes as higher worldwide lending costs affect the British government before Prime Minister Andy Burnham presents his first Budget next month. There is growing discussion about possible tax and spending choices, while interest payments in August reached their highest level for that month since records started in 1997.

Georgieva said governments face economic pressures beyond their influence but still control their own domestic decisions. She said the moment for action had arrived and that politicians would need "courage" to approve difficult but needed measures.

She noted what she called "fairly consistent action" to reduce debt and welcomed changes to planning and housing rules. She said advanced economies "don't have the cash" to directly stimulate expansion and must instead pursue reforms that prompt private businesses to invest.

Governments obtain funds by selling bonds to investment funds and paying interest in return. Georgieva said bond yields are also being lifted by large technology firms seeking major funding for artificial intelligence work, warning of a possible "significant financial stability risk" if AI systems act unpredictably. She added that Gulf oil and gas shipments should restart sustainably so the energy supply disruption fades.