4 April 2009

What if Britain has to go to the IMF?

An article published in the Telegraph this afternoon claims that senior officials have begun a massive spin operation to prepare the nation for Britain going hand in cap to the IMF for emergency funds.
Britain is heading for the IMF for funding, government ministers are admitting. They claim that there should be no stigma attached to the country making such a move, and have launched an extraordinary spin operation in preparation for it being needed.
The last time this that Britain required emergency funding from the IMF was back in 1976 and was widely seen as a national humilation. 

The IMF has been a constant headache for the Government since the financial crisis began. Back in October it has already warned that Britain would be hit hardest by the recession and faced an early 1990's style slump. The body then loudly criticised the governments flagship economic policy of cutting VAT in December 2008. 

But how would the public react to the nation requiring IMF funding today? 

Firstly, I highly doubt that Gordon Brown would make any move before a general election. The Conservatives have a potent attack in claiming that the government has bankrupt the nation, and a visit to the IMF cash machine would legitimise their claims and destroy and Labour claims to economic credibility. 

The image of the country going cap in hand to an institution typically associated with third world nation bailouts would be politically devastating. Of course we are in unique financial times, but the Conservative party have claimed for months that current levels of national debt are unsustainable. The Government have countered these suggestions by claiming the David Cameron is unwilling or uninterested in offering real help or solutions during the recession. 

In one move a trip to the IMF would destroy any image of Gordon Brown as being able to manage the economic crisis and wipe out any notion of Labour having competently managed the economy over the past twelve years. 

The publics concern for investment in public services would take a back seat to their desire for a return to economic prudence and a balanced book. This would give an incoming Conservative government cart blanche to cut funds from services 

Such a move would turn this from a centre left economic moment to a new era of right wing fiscal management. 

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