"International confidence in the UK government's economic policies had evaporated. Growth was stalling, inflation was galloping, and Labour back in power after a reckless Conservative administration had gambled on tax cuts was in deep trouble. It was 1976, when James Callaghan's government was forced to go cap in hand to the International Monetary Fund for an emergency loan. Fast forward almost half a century and some economists are drawing obvious parallels."
"The UK's long-term borrowing costs have risen close to their highest level since 1998, adding to pressure on the chancellor before a tough autumn budget. With a lacklustre growth outlook, sticky inflation, and Labour's welfare U-turns hitting the public finances, most economists expect Reeves to announce a raft of tax increases to cover a shortfall of between 20bnand 40bn against her main, self-imposed, fiscal target."
"You can quote me as saying that is complete nonsense something like that is just hysteria, said Michael Saunders, a former member of the Bank of England's monetary policy committee."
International confidence in UK economic policy has weakened to levels that invite historical comparison with 1976 when the government sought an IMF loan. Long-term borrowing costs have risen to near 1998 peaks, increasing pressure on the chancellor ahead of a difficult autumn budget. The growth outlook is lacklustre, inflation remains persistent, and recent welfare reversals have worsened public finances. Economists expect a package of tax rises to plug a projected shortfall between 20bnand 40bn against the fiscal target. Some commentators draw parallels with the 1976 crisis, but many economists dismiss an IMF bailout as unlikely.
Read at www.theguardian.com
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