Global public debt to hit $100tn this year, says IMF, as economic uncertainty threatens financial stability and growth – as it happened

Time to wrap up… here are today’s main stories:

UK employer national insurance hike threatens jobs and pay rises, firms warn

Julia Kollewe

British employers have warned that a rise in employer national insurance contributions in the budget could hit hiring and limit pay rises, hurting businesses including pubs, hotels and restaurants.

Keir Starmer and the chancellor, Rachel Reeves, have refused to rule out a rise in employer contributions in the budget on 30 October, as part of plans to plug what the government says is a £22bn hole in the public finances left by the previous Conservative government.

The head of UK Hospitality, which represents bars, pubs, restaurants and hotels, said such a move would be a tax on jobs.

“An increase would particularly hammer sectors like hospitality, where staffing costs are the biggest business expense,” said Kate Nicholls, the group’s chief executive.

“Hospitality businesses are much less able to stomach yet another cost increase, when they’re already managing increases in other areas like wages, food, drink and energy.”

IMF: Uncertainty is high, and it’s bad for financial stability and growth

Phillip Inman

The global economy is a volatile place and politicians trying to cope with the ups and downs should be cut some slack, the International Monetary Fund appears to be saying in its latest message ahead of the Washington-based organisation’s annual meetings next week.

Uncertainty about where the global economy is going has been higher since the Covid-19 pandemic and the inflation shocks that followed Russia’s invasion of Ukraine, the IMF says in an advanced chapter of its Global Financial Stability Review, just released.

Rising tensions from the ongoing situation in Ukraine and the middle east conflict are only adding to the difficulties for all governments of making economic and social policies that give a degree of certainty to households and businesses.

Uncertainty, says the IMF, is a growth killer. The lender of last resort says it has evidence from the 2008 banking crash, when the lack of certainty reduced GDP growth a year ahead by 1.2 percentage points on average in advanced and emerging market economies.

The uncertainy also persuades central banks to keep interest rates higher than they would otherwise do, crippling with higher interest bills those businesses and governments that have allowed their debts to pile up in the good times, when interest rates were low.

However, politicians are not entirely off the hook. The IMF says governments should avoid the temptation to loosen regulations that allow for reckless borowing to boost growth. It said politicians should maintain and enhance regulations limiting the risks that banks and other financial services can take.

Governments should also “build adequate international reserve buffers and allow exchange rate flexibility to help cushion the adverse spillover effects of an increase in foreign macroeconomic uncertainty”, the Fund says.

This is a message to Beijing and Washington to resist promoting a strong currency as a policy goal when that can distort global financial markets.

BMW chief says EU combustion engine ban will shrink car industry

Lisa O’Carroll

The EU’s plans to ban the manufacture of traditional combustion engines from 2035 will shrink the industry, BMW’s chief executive has warned as the German car industry battles with increased competition from China in the electric vehicle sector.

In a comment that will alarm Brussels, Oliver Zipse told the Paris motor show the 2035 cutoff point for CO2-emitting cars was “no longer realistic”.

The ban “could also threaten the European automotive industry in its heart,” Zipse said. The measures will “with today’s assumptions, lead to a massive shrinking of the industry as a whole”.