By Peter Omopo
London, September 9, 2025 — Business Secretary Kemi Badenoch has warned that the United Kingdom risks a repeat of the 1976 sterling crisis if the Labour government fails to implement a clear growth strategy.
Her comments come amid growing turbulence in bond markets, with UK borrowing costs recently reaching their highest level in 27 years before easing.
Speaking on Tuesday, Badenoch said several economic indicators suggest Britain could eventually be forced to seek assistance from the International Monetary Fund (IMF).
“We are not growing enough. If Labour continues with no plan for growth, we’ll end up going to the IMF cap in hand,” she said. “Many very well-respected commentators and economists are saying this.”
Labour quickly dismissed her remarks as political posturing, accusing the Conservatives of hypocrisy.
“Kemi Badenoch’s Conservatives crashed the economy and sent mortgages spiralling. The brass neck to offer advice now is beyond belief,” a Labour spokesperson retorted.
The debate reflects a broader concern among some economists that Britain could face a financial crisis reminiscent of 1976, when soaring inflation, a collapsing pound, and mounting debt forced Labour Prime Minister Jim Callaghan and Chancellor Denis Healey to secure a $3.9 billion IMF loan—the largest in the Fund’s history at the time. The bailout, widely seen as a national humiliation, eroded Labour’s credibility and paved the way for the Thatcher era of economic reforms.
Andrew Sentance, a former member of the Bank of England’s Monetary Policy Committee, recently highlighted “eerie parallels” between the present situation and that of the mid-1970s. However, he stressed that while the risks are real, the UK may not ultimately be forced into another IMF bailout.
The exchange between Badenoch and Labour underscores the mounting political and economic tension as Britain grapples with sluggish growth, rising debt, and fragile investor confidence.
