Conservative leader Kemi Badenoch says she is “really worried” the UK may be pushed into asking the International Monetary Fund for help, drawing parallels with the country’s 1976 bailout.
Speaking to BBC Newsnight, Badenoch warned the government could end up going “cap in hand” to the IMF unless it comes up with a credible plan to boost economic growth.
She also offered to work with Prime Minister Sir Keir Starmer “in the national interest” to cut welfare spending, arguing that Britain needs both spending cuts and stronger growth to escape what she called a “doom loop” of rising taxes and fragile public finances.
Labour quickly dismissed her remarks. A party source accused Badenoch of having a “brass neck” for giving economic advice, blaming the Conservatives for having “crashed the economy” when they were in power. Chancellor Rachel Reeves has also rejected the idea that the UK might need an IMF bailout, telling the BBC last week that there is no such risk.
The last time Britain turned to the IMF was in 1976, when Labour Prime Minister Jim Callaghan’s government was forced to take out a $3.9 billion (£2.9 billion) emergency loan during a sterling crisis. The bailout was a pivotal moment in postwar economic history and badly damaged Labour’s credibility at the time.
Asked why she believed the UK could face a repeat, Badenoch pointed to “a lot of indicators” and said many economists were raising concerns.
Some commentators, particularly on the right, have compared today’s situation with the 1976 crisis. Andrew Sentance, a former member of the Bank of England’s Monetary Policy Committee, recently described “eerie parallels” between Reeves and Denis Healey, the chancellor during that crisis. Still, Sentance concluded in an article last month that Britain is unlikely to actually call in the IMF.
Government borrowing costs remain under scrutiny. The yield on 30-year gilts has been climbing for months, reaching a 27-year high last week before easing slightly. Badenoch said this reflected a “crisis” in bond prices and warned that “we are not growing enough.”
She accused Labour of having “no plan for growth” and of assuming “things would just work” once they entered office. Unless Starmer’s government acts, she said, the UK risks being forced into an IMF rescue.
Badenoch insisted she was not “talking the country down” but fulfilling her duty by sounding the alarm. “If we do get that sort of crisis because of their bad decisions, we’re all going to suffer,” she said. “There is no benefit for the opposition party in a country that’s doing badly.”
The Conservatives say they are willing to work with Labour if two conditions are met: keeping the two-child benefit cap and cutting welfare. Badenoch said her party would not give Starmer a “blank cheque” but could back the government’s welfare bill if compromises are found.
Labour hit back hard. “Kemi Badenoch’s Conservatives crashed the economy and sent mortgages spiralling,” a party source said. “The idea that she can offer advice on the economy now is astonishing. The Tories haven’t listened and they haven’t learned.”
