Labour has got the message – developing nations suffer most from bond market turmoil | Heather Stewart

Developing nations face a triple shock from bond market turmoil, the UN warns. Markets have responded to the war in the Middle East and a spendthrift White House by dumping government bonds, driving up borrowing costs everywhere. Finance ministers and central bankers gathering in Bangkok this week for the annual meetings of the International Monetary Fund and the World Bank may be loth to point the finger at Donald Trump’s regime, but all are at least in part hostage to the US president’s war plans.

Even before the latest market gyrations, experts calculated that debt servicing costs absorbed 45% of government revenues in the global south, and 70% in low-income countries. This crowds out desperately needed spending on public services and investing for the future. There have been growing demands for reform of the framework for international debt in recent years, including from African Union heads of state, and under the G20 chairs of Brazil and South Africa.

The G20 – the forum in which Gordon Brown coordinated a global fiscal stimulus package in the depths of the financial crisis in spring 2009 – is meant to be an important body for discussing international economic issues. However, this year’s chair has been Trump’s US, which has placed much more emphasis on other aspects of the G20’s remit, including promoting global economic growth – somewhat ironically, given the main obstacle to achieving it is the war on Iran.

Next year, the presidency falls to the UK, and Labour has made clear it will have different priorities. These will include seeking a global agreement on AI regulation, which seems a faint hope but is clearly worth pursuing. The UK also intends to put unsustainable debt on the agenda.