Is The IMF taking Over perhaps just what the country needs

[WaitingInForMyFoodShopping]

Ok bear with me. This sounds like an idiotic thing to say because if the IMF are involved it means the country is officially in a mess and the IMF will slash spending and enforce their own budgets and rules. So anyone on benefits might lose them, NHS funding will likely go down, same for the police force etc

It just occurred to me today that the country is in a complete mess and there isn't really any end in sight.

Headlines today - I didn't read the detail but I am just getting more angry, helpless feeling and frustrated and want 'somebody' who has some balls to step in and say enough. Things change from today. Todays headlines are rising taxes, 1/10 high school kids on benefits, families of migrants can claim benefits from day 1 even if they don't speak english.

Now i will caveat this by saying the housing market does need sorted but lets be honest that's not what they are trying to do here - it's just about raising taxes. I also say there is another articles claiming ' a crackdown on bring families into Britain' - something that made me snort with derision giving the whole small boats/protests going on just now.

I mean lets just get to the point. Does ANYONE think RR/KS are able to fix this mess. I know they didn't cause it. I know they have been in office less than a year but if we give them another year are they able to fix it. I personally don't think so. It is going to need someone very tough to brave the mess and take it in hand (Maggie Thatcher where are you now).
So what are we left with - voting Reform - which I have joked about doing but i don't actually think that is the way to go. That's borne out of desperation. So who is going to fix it then.

AIBU to think a complete reset, painful as it will be by the IMF is just what the country needs?

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IMF will only become involved if the UK can't pay its debts denoted in another currency/asset. That might be for example USD or gold.

Since the vast majority of UK debt is denominated in GBP we can take care of our own debts, probably crashing the currency as a result, but hey ho, there is a price to be paid for everything.

The IMF stepping in doesn't do any good anyway. It just forces the government to make the cuts they could have made anyway, and any government calling in the IMF on the UK is going to be pretty much doomed.

Edit : The UK does actually have vast amounts of wealth, most of it tied up in pension funds. The government will not mess with this, because it would mostly be political suicide. But then calling in the IMF would be political suicide too. So take the choice between the rock and the hard place.

It would help if the government started to listen to business leaders, and not just of large companies but small and medium ones too. If they want to get the economy going (and I am not actually convinced that they do, as for how long can we dismiss deliberate policy as ineptitude), they need to loosen all the red tape of recent years and encourage and facilitate as many small/medium business to start up as possible. But they won’t.

I'm not a finance person retired or otherwise, but I thought the UK economy was a bit more complex than managing the interest on your credit card. Do forgive me if I'm mistaken here.

The IMF do not run countries.

they offer loans to countries in return for conditions.

we could ask them for a loan at any time as could pretty much any other country.

the conditions they put on loans change from loan to loan and country to country much like mortgages from a bank.

the U.K. government does currently owe quite a lot of money largely due to Covid however it is not likely to go bankrupt.

the IMF loan from the 1970s as well is largely recognised as being prompted by extremely negative forecasts that turned out not to happen. It wasn’t needed.

I retired at 50 and am also one of the economically inactive. I don’t see a problem though as (a) I’ve paid plenty of tax in the past and (b) pay plenty more tax even in retirement.

Now, in part because of the government agressive targeting of those with money, from the next tax year my tax will be going elsewhere. But that was a foreseeable consequence so I assume they are happy with that. Indeed, during the election Kier said if people didn’t like it they should leave. Now, he was talking about membership of the Labour Party, but…

yes early fifties. That is true I am not paying taxes anymore (although I was very much a high earner for many years and so paid eye watering amounts).

I don't claim any benefits and I am taxed on my savings interest and capital gains on my investments.

So yes I am still contributing although no longer by PAYE.

I have a private dentist but still use the GP for repeat perscriptions so yes I may well be a net withdrawer now but it's hard to say.

State pension is fully paid up (actually was at 46 cos I started contributions at 16 and had no career breaks/maternity leave).

I didn't say whether i was part of the problem or not. Although I don't really consider being self sufficient a drain on society but I do know what you mean. I could be out earning a wage and paying more taxes.

What I said was the country is in a downward spiral of a mess and without a strong leader who can generate income/growth in excess of current spending and debt financing we are all on a hiding to nothing.

So my thread was perhaps the IMF taking over might be best since the govt does not seem able to be able get us out of the mess.

I wasn't expecting miracles from the goverment after all it takes time to fix a mess made over many years but have you seen the increase in our debt position of the last year. It is terrifying.

Technically the country can't go bankrupt because we have our own currency and so technically the goverment can just print more money.

However as this happens the UK becomes a worse credit risk (we have already been downgraded in recent years) and so eventually nobody will want to lend to us. Or they will only lend to us at higher than past interest rates (which is what is already happening and causing part of the downward spiral)

Oh and for us mere pawns we can get hyperinflation which will mean your spending power goes down and down as each £1 is worth less and things cost more

I say give Tom Cruise a shot. He can’t be any worse than the other options.

yes you are right. The wealthy (who can leave or make changes) are doing just that.

Nobody stays where there is no growth, higher taxes, increasing debt and poor services.

So again another point towards the downward spiral we have got ourselves in.

You can't fix the country by taxing us to death.

lol plus he might be better at kidding us all on that the country is 'fine'

I mean he's not the most talented actor in the world but more believable that what RR is saying.

What particular tax changes under this government have affected you? Income tax has not gone up, you dint have a child in private school and as you’re retired I assume you’re not an employer? So what is it?

Sorry but I just don’t understand your mindset at all! It sounds like you have an incredibly lovely life. Wealthy, retired at 50, mortgage paid off. Can afford private services. So none of this stuff you are reading about actually touches you at all.

Why are you worrying yourself about national debt when it’s entirely abstract to you (and actually just the same situation much of the western world is in, but that’s for a different post)?

You talk about “sorting out the mess” but to me that would surely mean improving your and others’ standard of living. What you’re talking about is all stuff that would make everyone’s lives worse.

Why would cutting NHS spending be the solution to people waiting a long time for a GP appointment, for example?

I really think you need to step away from the doom and gloom headlines and just enjoy your incredible good fortune!

This is why a cap on spending will never be introduced as it’s difficult to overcome emotive arguments. In reality 4 year olds (sadly) die every day due to preventable conditions around the world. Do you know that half the deaths of children under 5 (globally) are attributed to malnutrition/ complications arising from malnutrition. Surely that has to be one of the most easily preventable causes but due to scarcity of resources.

In the UK I’m not talking about scarcity of food but of medical resources . People do die preventable deaths waiting for treatment, waiting on an ambulance due to a scarcity of those medical resources. Other people get treated at a cost of hundreds of thousands of pounds.

If we can accept the NHS budget as finite due to it already costing a fortune and us being too skint to borrow more money. Is there a point in time where you limit treatment due to costs? NICE does already to an extent. The question I suppose is where do you draw the line? If you were in charge of a health board and had budget constraints would you for example carry on funding annual injections for haemophilia A sufferers at a cost of £500k per person per year and cut spending in other areas which may lead you to preventable deaths. Or would you say they’d have to have cheaper treatment which will impact quality of life and may hasten death and use that money to treat 4yo s with leaukemia. Would you ever spend over a million quid on gene therapy for an individual, and if so would you still do it if you had to take a couple of ambulances off the road to fund it?

It is, but not much more.

At the end of the day you can argue that the UK has the ability to print money into it's own bank account. Which it literally does because it controls the currency.

However it can't do that without consequence. We can generate as much money as we want at the drop of a hat, there is a magic money tree contrary to what Teresa May would have you believe.

What there is not is a magic wealth tree. So printing money will trash the currency and make a lot of things a lot more expensive, particularly imports or anything that is sourced from abroad, like foreign holidays.

So yes, managing a government budget is a bit more complex than managing a household budget, but not much more. If you don't have the wealth generation to back money generation your money becomes worthless. And you can't print wealth.

Thanks for posting.

Yes I am aware that they don't actually run countries but they do insist on the country sticking to budgets that will return it to sustainability as part of the deal. So they will in effect cause changes/cuts to be implemented. I also understand they could insist our pension age rise and I have heard we will have to rejoin the EU too as part of the deal/bailout.

You are correct - we can not go technically bankrupt as we have our own currency. However my understanding is that we will have high inflation (stagflation as they call it with no growth and high inflation). We will also be downgraded as a credit risk which means it costs us more to borrow which increases the downward spiral.

Surely the fact that our debt has increased so much in the last year is because of incorrect forecasting which was much more negative than predicted.

Anyway it is very interesting to hear everyone's thoughts. I am actually a little bit more worried now if anything as there seems to be very little awareness of the UK's current spiral based on the replies.

thanks for chipping in and helping me.

I am quite shocked at how little awareness there is of our situation.

I understand when people are working full time and have kids etc (are busy) they do tend to focus on their own little world (I did it myself when i was out working)

It's only now that I am retired I am much more aware of economics and how things work and what is going on with our goverment and economy.

If you, or someone you love, god forbid, had an accident and you needed intensive care, should we just pull the plug because its expensive? Which human lives are we going to discard first? Would you put yourself at the front of that queue?

This part beggars belief:

"It would predominantly impact the disabled (adults and children) , the elderly and those unlucky enough to have expensive conditions, accidents or illnesses .

It’s obviously ethically challenging to consider"

Anyone can become disabled at any time. You do realise that?

The problem is that the NHS needs a complete overhaul. The answer is not to just let disabled people fucking die because "oh well".

What is it with all these borderline eugenics comments on Mumsnet at the moment?

Disabled people have value, believe it or not.

Immediate market reaction to re-shuffle is not exactly a vote of confidence. Markets seeing it as a signal of more Gilt issuance/ inflation to come. Yield spread between what UK 10Y paper trading at - and max from the rest of the G7 - is now at +50bp. That's the highest on record.

It's always just a rule for other people.

I think you are missing the point.

We (the retired at 50 lots) are not worried about ourselves so much as our country and suggesting that somebody (IMF) needs to do something before we implode (the country, not us the wealthy retired as you are calling us)

Cutting funding does not give us more GP appointments, it gives us less.

However the point am I making is the current level of expenditure is one we can no longer afford. Each month our debt increases and our interest payments go up. There are only a few ways out.

Refinance our debt to a lower rate which would cut interest payments each month

Start spending within our means which means cuts to spending or increasing taxes. The country is already about at the max level they can cope with taxes and the goverment does not seem able to cut spending (which is not ideal anyway given how services are all slashed already).

The best way to get us out is to generate growth so our income is greater than our expenditure /interest payments each month and thus we begin to chip away at the debt.

Instead what we are doing is borrowing more each month to pay the debt on our current finances thus making the situation even worse for the following month.

I think it is what we need. We need an outside factor to take the knife needed to the cost of the welfare state, we need it halved not tweaked round edges. It is too hard for politicians to make the decisions that are really need to turn around the country.

the problem isn't do the disabled have value.

The problem is we cannot continue with our current income v outgoings.

Our debt is increasing each month.

Did you know that before the NHS the reality was you got the doctor out if you could afford it and if you couldn't well you suffered till you got better or died.

If the country cannot afford to keep going with it's current spending (which includes the NHS) as we are literally going down the toilet, what do you suggest.

Will people suffer - yes. Is it ideal - obviously not.

I mean if you lose your job next month and your expenditure is now more than your income, what do you do.

You try and raise more income or you cut your expenditure or you borrow which only works in the short term if you don't fix it.

So you lose your job and your expenditure is now more - do you stop buying food, do you lose your house, do you stop paying for your private dentist or do you do nothing and keep spending at the same rate (even if that was possible) until your house is repossessed and your are out of the street. This is where our goverment is at.

More fucking doomerism. It's so transparent and boring.

thank you. That is the point I was trying to make.

Our leaders are not tough enough or perhaps competent enough to do what needs done to return us to a sustainable position where we are repaying our debt and not increasing it month on month.

I understand - nobody wants to be the bad guy. I'm pretty sure the Tories lost the election on purpose knowing what was to come.

Debt servicing cost is very high and you are right to see what an issue this is.

@GasPanicis also right to say an IMF bailout would be political suicide.

What Labour actually do I guess we’ll see.

I am lucky, although that’s a direct result of hard work. Is that luck…? As a result I have choices. Living outside the UK for a part of our retirement was always the plan; I put that on the back burner when my husband died, some 6 years ago now. But, party as a result of where I am on my grief journey, and partly because of the agressive targeting of anyone who’s managed to actually do alright in life, it now makes sense to make the move.

At a detailed level, the capital gains tax increase has hit me quite hard, and is usurious as it’s largely just a tax on holding assets a long time and inflation. The continued freezing of personal allowances has an effect, as post retirement I have less opportunity to increase my income to offset it. Energy prices are high and rising as a result of the governments polices.

The new double taxation of DC pension funds on death is the biggest hit though. They were previously completely exempt from tax. They’ll now be subject to IHT on the estate and IT on the recipient. Given the numbers involved that’s a 67% tax take - and will be a very high 6 figure sum, maybe even seven figures if markets continue to perform. Paying either IHT or income tax would have been reasonable, and even justifiable. Paying both is not. I don’t have the luxury of a government final salary pension.

Then there’s the fact that NHS is a shambles, and though I have private healthcare that seems to be next in the governments target for VAT. I don’t agree with the removal of choice, be it in education, health or housing.

Property is also being aggressively targeted, and so it makes sense to simplify and downsize my footprint in the UK. That’ll free up some housing, which should help Angela :)

So for me, a move to a now makes sense. And do you know what, the tax environment in the long run on income will be similar. There just won’t be that anti-success feeling that pervades this government and, because of the spin, the UK as whole. I will also have some lovely weather, food and wine ;) I’ll keep a presence in the UK - I have friends and family here. But I won’t be a tax resident.

It’s not the doom and gloom that’s made me decide, it’s the direct finacial impact on me.

It may bore you but it's not like it has never happened before.