IMF Bailout Could Be in UK"s Future, Says Strategist
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.” Strategist Discusses Possibility of IMF Bailout for the UK
Peter Chatwell, head of global macro strategies at Mizuho Securities, shared his outlook for the U.K. economy in an interview on Bloomberg Television Monday.
He explained that Britain’s new prime minister, Liz Truss, has promised fiscal policy that the British government cannot afford. He also does not expect the Bank of England to be able to get inflation anywhere near its 2% mandate anytime soon.
“I’m thinking of two potential crises that this reminds me of,” the Mizuho strategist said. Noting that one of them is the European Exchange Rate Mechanism in 1992, he opined: And then I’m thinking about the possibility of an IMF bailout, like in 1976.
Truss, a former British foreign minister, succeeded Boris Johnson and was appointed the new U.K. prime minister by Queen Elizabeth on Tuesday, beating former Chancellor of the Exchequer Rishi Sunak.
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.
Chatwell was not the only one seeing the possibility of an IMF bailout in the U.K.’s future. Deutsche Bank strategist Shreyas Gopal said Monday that “A balance of payments funding crisis may sound extreme, but it is not unprecedented,” elaborating: 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.
“Today, the U.K. does retain some key lines of defense against a sudden stop, but we worry that the risks are rising nevertheless,” the strategist detailed.
Former Conservative Chancellor of the Exchequer Ken Clarke said Tuesday: “We are plainly likely to enter a long and perhaps quite severe recession. Certainly the worst since 1990 and it may be the worst since before that.” Tags in this story IMF, imf bailout, imf loans, imf package, Liz Truss, new uk prime minister, uk, uk financial crisis, uk imf assistance, uk imf bailout, uk imf help, uk imf loan, UK inflation, uk recession
Do you think the U.K. will need an IMF bailout? Let us know in the comments section below. Kevin Helms
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography. Putin Threatens to Let Europe "Freeze" — Russian President Warns "We Will Not Supply Gas, Oil, Coal, Heating Oil" ECONOMICS | 9 hours ago Despite the Historical Blunders of Price Fixing, European Commission and G7 Pledge to Impose Price Controls ECONOMICS | 13 hours ago
Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articlePutin Threatens to Let Europe ‘Freeze’ — Russian President Warns ‘We Will Not Supply Gas, Oil, Coal, Heating Oil’ Next articleApple Shielded From Crypto Wallet App Lawsuit, Judge Rules Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItDraft Law Regulating Aspects of Crypto Taxation Submitted to Russian Parliament
A bill updating Russia’s tax law to incorporate provisions pertaining to cryptocurrencies has been filed with the State Duma, the lower house of parliament. The legislation is tailored to regulate the taxation of sales and profits in the country’s market ... read more.Fidelity Investments Launches Crypto, Metaverse ETFs — Says "We Continue to See Demand" SEC Risks Violating Admin Procedure Act by Rejecting Spot Bitcoin ETFs, Says Grayscale Microbt Reveals Latest Bitcoin Mining Rigs — Machines Produce up to 126 TH/s With Custom 5nm Chip Design Terra"s Algorithmic Dollar-Pegged Crypto UST Is Now the Third-Largest Stablecoin