Would an IMF bailout guarantee a Conservative government?
The Daily Telegraph has a story that a ‘Senior Cabinet Minister’ has told them that Britain may consider asking the International Monetary Fund (IMF) for funds, and that it should not be too proud or fearful to do so.
The process of requesting a bailout from the Washington-based fund has long been considered a demeaning final recourse for a national economy in trouble. Common amongst Latin American and Asian economies in the 1980s and 1990s, Hungary and Iceland have already indicated that they will approach the IMF for support.
The newspapers have discerned a ‘softening-up’ campaign by ministers such as Peter Mandelson and Stephen Timms – talk of ‘destigmatising IMF support’ has led many to think that the Government has already made the decision to approach the IMF, and is merely worried about the political implications.
Worry they might – diary columns in several papers noticed the collective shiver that ran up Labour MPs’ spines (insert joke here) when George Osborne pointed out that every Labour government had run out of money, and historical analogies with the last time a Labour government was deposed are not welcome at present. Thus an IMF bailout would be political dynamite, given that the last time Britain was forced to accept such assistance was in 1976.
I am nowhere near as qualified to discuss economics as many of the brilliant minds who contribute to PB.com in the comments, and can give no mature judgement on whether a bailout will be necessary, the terms that would come attached, or how much latitude the government has in making that decision. Politically, however, should Brown and Darling be forced to go to the IMF ‘cap in hand’, I will start wagering some quite serious money on the Conservatives winning an overall majority at the next election.