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Should Rachel Reeves resign over the 'run on pound' crisis. (Image: Getty)
Rachel Reeves could be driving Britain towards a 1970s-style debt crisis and subsequent bailout from the International Monetary Fund (IMF), economists have warned. In 1976, James Callaghan's Labour government had to borrow $3.9 (￡2.8) billion from the IMF with the intention of maintaining the value of the pound. At the time, it was the largest loan ever to have been requested from the fund.
Professor Jagjit Chadha, who recently stepped down as the head of the National Institute for Economic and Social Research, compared the current situation to that of nearly 50 years ago. He told the When the Facts Change Substack: "I’m in a world in which I could imagine it [an IMF bailout] happening, and we’ll be bereft in that case. We will not be able to roll over debt, we will not be able to meet pensions payments, benefits will be hard to pay out."
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Rachel Reeves puts UK on road to ruin as we face 1970s-style run on the pound
UK months away from joining Ghana and Mongolia begging for a bailout
Six money changes in September to be aware of - will you be impacted?
The top-paying easy access saver at 4.84% - but there's a catch
Russian bank run crisis as savers rush to withdraw cash amid fears of financial collapse
GB News halts for Rachel Reeves breaking alert after devastating inflation figures
UK mortgage holders urged to make overpayment move as fixed rate dips below 5%
Tax raid Chancellor Rachel Reeves blamed for '100k pub and restaurant job losses'
Rachel Reeves handed brutal warning as disastrous new inflation figures published
Inflation spike 'extinguishes' hopes for further interest rate cuts
BBC Breakfast viewers 'can't bear to watch' as show airs devastating breaking news
Anyone with a Cash ISA urged to move money
Bank boosts interest on Cash ISA to 4.21% and earns ‘excellent' rating
The 7 crazy policies backed by the Labour minister writing Rachel Reeves's Budget
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Cost of train tickets set to soar in 2026 after inflation skyrockets
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Andrew Sentance, a former member of the Bank of England’s rate-setting Monetary Policy Committee, echoed this sentiment, warning that "we are heading for an economic crash".
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He said: "Rachel Reeves is on course to deliver a [former Chancellor Denis] Healey 1976-style crisis in late 2025 or 26. Like Healey, she has massively boosted public spending, borrowing and taxes – fuelling both demand-pull and cost-push inflation.
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"Unless policies are reversed, we are heading for an economic crash. We’ve still got bond yields that are even higher than the US.
"In fact, we’re even higher than Greece when it comes to borrowing costs, which is an indictment of where the UK is at the moment, or where it’s perceived to be by the financial markets."
Reform UK leader Nigel Farage also warned of an impending "economic doom loop" across the "bitterly divided" nation.
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UK mortgage holders urged to make overpayment move as fixed rate dips below 5%
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Anyone with a Cash ISA urged to move money
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Anyone with savings in one type of bank account urged to act from Wednesday
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UK months away from joining Ghana and Mongolia begging for a bailout
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He told The Telegraph: "I have a sense of deja vu. It is the 1970s all over again, it’s just that our social position is even worse than it was then.
"We had terrible times in the 70s economically, but at least we were fairly united as a country, as a culture. This time we have bad economic times here, worse coming, in a nation that is bitterly divided, so it’s not a happy formula.
"We are in a debt spiral and I expect Rachel Reeves' Budget in the autumn will make it even worse. In fact, we’re not very far away from being in an economic doom loop."
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