Rachel Reeves “Heading Towards IMF Bailout”, Leading Economists Warn
Rachel Reeves’ tax-and-spend gamble is driving Britain towards a 1970s-style debt crisis and bailout from the International Monetary Fund, leading economists have warned. The Telegraph has more.
They have said the Chancellor’s handling of the economy risks a return to the years of high inflation and borrowing that ended with Britain being forced to borrow billions from the International Monetary Fund (IMF) 50 years ago.
It came as leading retailers sounded the alarm over the rising cost of taxes and red tape, which is pushing the country into an era of “stagflation”.
On Saturday night, Nigel Farage, the Reform UK leader aid the economic situation was like “the 1970s all over again”, while Kemi Badenoch, the Conservative Party leader, said that the surging cost of Government borrowing was “the price” of Labour’s “economic mismanagement”.
Ms Reeves is under huge pressure ahead of the autumn Budget, with forecasts showing rampant borrowing has created a £50 billion black hole.
She is widely expected to put up taxes again to cover the shortfall despite warnings that doing so will only further stunt Britain’s anaemic growth.
Prof Jagjit Chadha, who recently stepped down as the head of the National Institute for Economic and Social Research, claimed the economy was at risk of “collapse”.
He said the financial situation was “as perilous the period leading up to the IMF loan of 1976”, when Britain had to be bailed out by the global banking body.
He told the When the Facts Change Substack, written by the Telegraph columnist Liam Halligan: “I’m in a world in which I could imagine it [an IMF bailout] happening, and we’ll be bereft in that case.
“We will not be able to roll over debt, we will not be able to meet pensions payments, benefits will be hard to pay out.”
Andrew Sentance, a former member of the Bank of England’s rate-setting Monetary Policy Committee, also said the situation was “very reminiscent of the 1970s”.
He added: “Rachel Reeves is on course to deliver a Healey 1976-style crisis in late 2025 or 26. Like Healey, she has massively boosted public spending, borrowing and taxes – fuelling both demand-pull and cost-push inflation. Unless policies are reversed, we are heading for an economic crash.
“We’ve still got bond yields that are even higher than the US. In fact, we’re even higher than Greece when it comes to borrowing costs, which is an indictment of where the UK is at the moment, or where it’s perceived to be by the financial markets.”
Worth reading in full.
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It is spresumtious to assume the IMF would bail out the Labour government.
The USA has the largest vote at the IMF and EU member states have a large block between them. The EU would seek to extract additional long term control over the UK economy and politics as a price for its agreement. Besides, the EU might be the next to ask the IMF for support.
I suspect the biggest objections would come from the newer, growing economies who may well wonder why their people have to contribute to the British government which has been incompetent and profligate for decades. I seem to recall there was push-back in the 1970s from them but now they are stronger and have more reason to complain.
Perhaps an IMF bail-out or the consequences of either its agreement or refusal might be the issue that breaks the government and forces a General Election. Can we imagine the socialists in Parliament (in various parties) agreeing to the measures needed to meet IMF conditions?
Assuming Reform form the next govt, they’re going to have to have very thick skin to survive the onslaught directed at them for taking the much needed corrective fiscal action.
Much more than ‘fiscal action’ will be required to fix the visible ‘fiscal problem’.
There is much discussion on returning decision making to Parliament, so that responsibility will lie there and, after failure, we can vote another lot in. The easiest policy would be to repeal everything passed into law since 1997, bar a few exceptions.
This requires a detailed manifesto, so that the civil service will know what needs to be done on Day One. And that will need fresh faces with the relevant experience. Recent PPE and History graduates, just stay away, to avoid being offended.
Is Farage doing this? He’s had a year already.
To try to cheer us all up a little in these grim times, here’s our Rachel singing about how she crashed the economy: https://drive.google.com/file/d/1Zb1my2Sq5uxlk_wtwivxmBE0tQYN92TH/view?usp=sharing
The first rule of economics is that if you find yourself in a hole, stop digging. But Labour are constitutionally unwilling to ‘stop digging’ because spending other peoples’ money is easy and a feature of class war.
Indeed – there are some simple things they could do immediately:
All they need is the balls to enforce it – I assume that’s what they lack? (And don’t want to be unliked for being mean and nasty?)
They could contact Charlotte Gill for some ideas on how to cut spending.
But it’s all part of the plan.
The wolves are circling the wagon. The Unions and backbench Labour MPs have the power to bring 2TK down and put their interests behind another Labour candidate.
Russia has the energy, chemicals and grain that Europe and the U.K. need and can also force change if they stop dealing via India.
Trump wants to control the Indian trading as well.
I think the moves will start soon.
The policies have all been signed off by Starmer and apart from backtracking on the welfare cuts it is what they said they would do, and broadly what all the other Uniparty parties would have done and have been doing. Big government socialism and bottomless welfare and net zero just don’t and can’t work.
The Corona fascism and shutting down the world – never discussed – economic impact was massive.
Netzero.
Endless warring.
Endless invasion and associated welfare.
Endless spending on international ‘projects’.
Endless government sucking on my private teats.
Yes there are consequences when you go socialist. Bankruptcy is one.
I read elsewhere that Reeves the Socialist just bought another £750 K home. House #3. Where is the money coming from? Who owns this fat street walker?
Are you confusing Ranting with Thieves?
You are correct it is clown Marxist Rayner. I would assume Reeves’ 3rd house is worth more.
“Farage U-Turns on Mass Deportations”
https://thenewconservative.co.uk/farage-u-turns-on-mass-deportations/#:~:text=Farage%20U%2DTurns%20on%20Mass%20Deportations
Frank Haviland – always worth a read.
Reference Farage:
As Milton Friedman famously put it, “The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing.” Farage may or may not be the right person come 2029. But even if he is the wrong person, right now he’s making the right noises.
I have been warning that we were being steered towards the IMF more or less since 2020. It’s taken the bloody Torygraf long enough to catch up.
The intention of this government has always been to bankrupt the country and then sell it off piecemeal to the Blackrock community.
And my recent forecasts have been that the collapse would occur before end of 2026.
FFS.
Perhaps this is all still part of The Great Reset and Agenda 2030 and ensuring western Sovereign nations are neutered.
It most definitely is and it all began with the Scamdemic.
I would go back as far as the Club of Rome and also people like Maurice Strong and Ted Turner. But perhaps it began with the UN?
The IMF might be able to bail out Birmingham, our very own 3rd world shiitehole, but it hasn’t anywhere near the money to bail the UK out…..or any other major Country…..we are on our own here.
As I have pointed out more than once, the country will be sold off piecemeal.
It would have required
(a) extremely benevolent economic conditions coupled with
(b) exceptionally good luck
for a completely talentless non-entity like Rachel Reeves not to bring the country to the brink of bankruptcy.
As neither condition (a) nor (b) is met, I conclude that we are heading for a large financial correction and it’s not going to be pleasant.
We are heading for a disaster of unimaginable proportions.
The UK is incapable of taking its medicine, which is to freeze public spending, you can have a pay rise, but only if there are fewer of you, and you can have a state pension, but only if you really need it.
Germany did when it re-united with the East. Iceland did when its banks went bust.
The UK makes things worse by shrinking its primary industries (oil/gas/coal/fish/farming/steel/chemicals/cars). Does anyone in govt even know what a primary industry is?
It isn’t the UK that is incapable, it’s the Socialists, Fabian and Tory, that are unable to take appropriate action.
Fabricated events only work when there are multiple agendas being served as outcomes. I believe the vast untrammelled debt created in supposed mitigation of CV19 lockdowns, furlough payment, quackcines and so on was deliberately spent to bankrupt the nation in order that the creditors could then take control of the assets: our national property, our private property and our freedom not to be tax-cattle owned by the predatory ruling class.
Exactly. Points i have been stating these last five years.
These points and a plethora of other too, such as: rafts of QE to prop up the repo market but preventing runaway consumer inflation, via lockdowns, instead diverting the extra boodle in to asset inflation. Such as: advancing global governance. Such as: boosting digital ID and CBDC. Etc etc.
I remember the 70’s but this latest crisis has the addition of the Net Zero craziness robbing us all and wrecking industries. I suppose Dale Vince will still be grifting along with his ilk.
It isn’t just the economic harm of Net Zero policies, it’s the corruption of the Scientific Establishment, the Education Machine, especially the universities, and the misinformation given to the public on the Legacy Media. It also hides the exciting revelations about Space Weather and how it affects our weather, climate and geological events, like earthquakes and volcanic activity.
So much is in tatters, so much is lost, including the confidence in Science, Engineering, Manufacturing and Business in general. It needs to be reversed before the country can be revived.
I am back in the USA. Everyday I wake up with a smile as our President tackles another huge problem. I wonder when he sleeps. I am from Chicago, but have lived in the Uk for 27 years. I have to ask, is there no one who can stop the complete and utter incompetence of the existing gov’t. what do most rational people do when they have no more money? They QUIT spending. And yet your gov’t despite being broke KEEPS spending. £5 & 1/2 million a day on illegal immigrants as an example.
there is no longer prosperity in the UK, no longer joy on people’s faces. There is nothing but a growing list of more punishments in the form of taxes and benefits for those who work for a living.
can anyone tell me why recent Cambridge medical students are unable to get employment in the nhs? Oh I could go on, but you get the
picture, or should I say the nightmare.