Badenoch warns UK could face IMF bailout repeat of 1976 crisis

The leader of the UK Conservative Party, Kemi Badenoch, has cautioned that Britain risks sliding into a financial crisis similar to the 1976 sterling collapse, which forced the country to seek a $3.9 billion loan from the International Monetary Fund.

Speaking in a BBC interview on Tuesday, Badenoch said the lack of a credible growth strategy under Prime Minister Keir Starmer’s Labour government could leave the nation exposed to a humiliating bailout.

“A lot of the indicators are pointing in that direction. We are not growing enough. If Labour continues with no plan for growth, we’ll end up going to the IMF cap in hand. Many very well respected commentators and economists are saying this,” she warned.

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Badenoch accused the Labour government of locking the UK in a “doom loop” of higher taxes, shaky public finances, and rising borrowing costs. She insisted that without urgent reforms, Britain could stumble into the same economic turmoil that damaged Labour’s reputation nearly five decades ago.

Her remarks came as bond markets put pressure on the government, with borrowing costs recently reaching their highest level in 27 years before easing slightly.

Labour, however, dismissed her concerns, describing them as “astonishing hypocrisy.” A party source countered: “Kemi Badenoch’s Conservatives crashed the economy and sent mortgages spiralling. The brass neck to offer advice now is beyond belief.”

The debate echoes warnings from some economists who see “eerie parallels” with 1976, when soaring inflation, a collapsing pound, and mounting debt forced the Labour government of Jim Callaghan and Chancellor Denis Healey to seek what was then the IMF’s largest-ever loan.

While former Bank of England policymaker Andrew Sentance noted similarities between the present situation and that era, he stressed in a recent article that “the UK may not end up calling in the IMF.”