Badenoch warns of IMF bailout for the UK
Conservative leader Kemi Badenoch has warned that the UK might be forced to embark on a 1976-style bailout from the International Monetary Fund.
Speaking to BBC Newsnight, Badenoch said the country could be forced to go “cap in hand” to the IMF unless the government delivers a plan for economic growth.
“Labour does not have any plan for growth. They thought that as soon as they got into power, things would just work because they’re Labour and they believe in their own righteousness.
“That is not working – they need to get a plan to grow our economy, otherwise we will end up going to the IMF cap in hand.”
While economists are split on whether the UK will actually require financial assistance, it is clear that Prime Minister Keir Starmer and Chancellor Rachel Reeves are facing increased pressure due to the country’s recent poor economic data.
The broader picture is one of tight fiscal constraints, rising borrowing costs, and the risk that, without stronger growth, the government ends up trapped in a cycle that is hard to escape, says Richard Carter (Head of Fixed Interest Research at Quilter Cheviot).
“For the public, that translates into tougher fiscal choices for the government, with less room to ease the tax burden or boost investment. This only adds to the headache facing Rachel Reeves as she prepares her second budget, with markets making clear that borrowing to fill the black hole in the public finances will be difficult and may ultimately point to further tax rises,” he said.
“There are some silver linings: savers may benefit from better yields on fixed income investments, while retirees shopping for an annuity will find the income they can secure today is far higher than just a few years ago.”
