IMF Bailout Could Be in UK’s Future, Says Strategist – Economics Bitcoin News

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 the possibility of IMF Bailouts for the UK

In an interview with Bloomberg Television, Peter Chatwell (head of global macrostrategies at Mizuho Securities) shared his views on the U.K.’s economy.

He explained that Britain’s new prime minister, Liz Truss, has promised fiscal policy that the British government cannot afford. He doesn’t think the Bank of England will be able get inflation to 2% anytime soon.

“I’m thinking of two potential crises that this reminds me of,” the Mizuho strategist said. The European Exchange Rate Mechanism, 1992 was one of these potential crises, the strategist noted.

And then I’m thinking about the possibility of an IMF bailout, like in 1976.

Truss was a former British foreign secretary and succeeded Boris Johnson. Queen Elizabeth appointed Truss the U.K.’s new prime minister on Tuesday. He beat Ruchi Sanuk, the former Chancellor at the Exchequer.

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:

The U.K. was forced to use an IMF loan by a combination of severe fiscal shocks and aggressive fiscal spending.

“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.”

Are you a believer that the U.K. would need an IMF bailout. Comment below to let us know your thoughts.

Kevin Helms

Kevin is a graduate of Austrian Economics. He discovered Bitcoin in 2011, and has been an advocate ever since. He is interested in Bitcoin security and open-source software, network effects, and the intersection of cryptography and economics.