Reform UK leader Nigel Farage warned of an impending “economic doom loop” across the “bitterly divided” nation.
Should Rachel Reeves resign over the ‘run on pound’ crisis. (Image: Getty)
Rachel Reeves could be driving Britain towards a 1970s-style debt crisis and subsequent bailout from the International Monetary Fund (IMF), economists have warned. In 1976, James Callaghan’s Labour government had to borrow $3.9 (£2.8) billion from the IMF with the intention of maintaining the value of the pound. At the time, it was the largest loan ever to have been requested from the fund.
Professor Jagjit Chadha, who recently stepped down as the head of the National Institute for Economic and Social Research, compared the current situation to that of nearly 50 years ago. He told the When the Facts Change Substack: “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, echoed this sentiment, warning that “we are heading for an economic crash”.
He said: “Rachel Reeves is on course to deliver a [former Chancellor Denis] 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.”
Reform UK leader Nigel Farage also warned of an impending “economic doom loop” across the “bitterly divided” nation.
He told The Telegraph: “I have a sense of deja vu. It is the 1970s all over again, it’s just that our social position is even worse than it was then.
“We had terrible times in the 70s economically, but at least we were fairly united as a country, as a culture. This time we have bad economic times here, worse coming, in a nation that is bitterly divided, so it’s not a happy formula.
“We are in a debt spiral and I expect Rachel Reeves‘ Budget in the autumn will make it even worse. In fact, we’re not very far away from being in an economic doom loop.”
