A strategist warns that an IMF bailout, like in 1976, could be in the UK's future. recession inflation LizTruss
Mizuho Securities’ head of global macro strategies has warned that an IMF bailout may be in the U.K.’s future. Moreover, a former chancellor of the exchequer cautioned that Britain is entering a long and severe recession, emphasizing that it’s “the worst since 1990 and it may be the worst since before that.”Peter Chatwell, head of global macro strategies at Mizuho Securities,He explained that Britain’s new prime minister,, has promised fiscal policy that the British government cannot afford.
In September 1976, as the pound hit a record low, James Callaghan’s Labor government asked the IMF for a $3.9 billion loan, which was the largest amount ever requested from the IMF at that time. A combination of aggressive fiscal spending, severe energy shock, and a slide in sterling ultimately resulted in the U.K. having recourse to an IMF loan in the mid 1970s.