Badenoch ‘worried’ UK may need IMF bailout

Kemi Badenoch, leader of the Conservative Party, has raised alarms that the United Kingdom could be compelled to seek an International Monetary Fund bailout, reminiscent of the 1976 crisis, if the government fails to deliver a concrete plan for economic growth. In a recent interview with BBC Newsnight, Badenoch articulated her fears, stating that the UK might be forced to go “cap in hand” to the IMF without immediate action. She emphasized that this concern is driven by current economic indicators pointing towards instability, such as UK borrowing costs reaching a 27-year high last week, which she described as a crisis in bond prices. Badenoch stressed that the economy is not growing sufficiently under the Labour government, accusing them of lacking a growth plan and relying on their perceived righteousness rather than practical solutions. Drawing historical parallels, she referenced the 1976 sterling crisis when the Labour government under Prime Minister Jim Callaghan secured a $3.9 billion emergency loan from the IMF, an event that significantly undermined economic confidence. Several economists, particularly on the right, have echoed these concerns, with Andrew Sentance, a former Bank of England official, noting “eerie parallels” to the 1976 situation, though he and others have also expressed skepticism about an actual bailout being necessary. The Labour Party responded sharply to Badenoch’s comments, with a source labeling her advice as having a “brass neck” given the Conservatives’ role in past economic turmoil, and Chancellor Rachel Reeves had previously dismissed the need for IMF assistance in a BBC interview last week. In her remarks, Badenoch offered to collaborate with Prime Minister Keir Starmer “in the national interest,” specifically on reducing welfare spending, including maintaining the two-child benefit cap and implementing cuts, despite the Conservatives not supporting the government’s welfare Bill in July due to a backbench rebellion. Badenoch defended her stance against accusations of talking the country down, arguing that inaction would be a dereliction of duty and that economic failure would harm everyone, pledging support for measures that promote stability and growth. The ongoing economic challenges underscore the pressure on the government to devise effective strategies, with political tensions highlighting the need for bipartisan efforts to avert a potential crisis and ensure long-term financial health.