France on track for International Monetary Fund bail out

[EvangelicalAboutButteredToast]

https://www.politico.eu/article/francois-bayrou-france-bombshell-puts-debt-sustainability-back-on-the-agenda/

Sounds like bad news for Europe - particularly at a time when we need extra money for defence.

There's a good chance that we're heading for the same here - there was an article in the Telegraph recently quoting economists saying exactly that. Our government wasn't able to get welfare reforms past its own MPs, and tax increases will only be counterproductive as people will work, spend and save less. I can see it getting to the stage of an IMF bailout and national policy will end up being set by them.

What then? I dont understand it all but none of it sounds great. If the IMF bails a country out to prevent bankruptcy what happens next?

Too many pensioners, innit

The IMF is a members' club. The UK and France pay in, and can therefore draw out if they need.

We last needed an IMF loan in the 70s.

The IMF developed out of ideas from British economist John Maynard Keynes, who saw the terrible damage done to the global economy in the 20s and 30s of the last century due to lack of an international monetary body.

It is politically embarrassing to have to ask them to loan you though!

Our debt interest costs are far higher in the UK, although France has more debt. Germany is starting to catch up as is most of the G7.

The main problem is the IMF doesn't really have the resources to intervene in more than one of two sovereign debt crises and there are a lot of candidates for bailouts at the moment.

If the IMF does get involved then government spending is going to be slashed.

Exactly this! the IMF won’t lend unless there are deep spending cuts. Labour tried to get through some fairly modest cuts not so long ago which were rejected by back benchers. Now we will likely have far more severe cuts forced upon us.
A few political commentators I’ve seen have said the Labour government can’t survive such a scenario either as the governing party or even as a viable political party?

That's why my big fear is that their ideology won't let them go to the IMF and instead they will just rob the population into poverty to keep the plates spinning.

Don't forget Labour has plans to allow all residents of the UK to vote, not just citizens. This will change the voting demographic massively in their favour if the mass immigration continues.

I see our main problem is Russia slowly invading Europe and Europe not having the money to defend itself - all while Trump looks on.

Russia is very unlikely to attack NATO/EU, it simply doesn't have the means or the will to take on half a billion people.

Pushing civil discontent, revolutions and even proxy wars around the periphery are much more likely. See the recent examples in Serbia, Moldova and Georgia where the EU, US and Russia have been pushing their various interests.

I don't know about France's financial status, but ours is very very dire.

It is astounding to me everyday that the Chancellor is still in a job, still spouting utter lies about the economy and still dreaming up new ways to fuck the economy more.

Forgive my ignorance- I really know nothing about this kind of thing, but if we were to request a bail out would the IMF insist we do all we can first, so surely should she not be stopping all foreign aid etc? This is always brought up and people say ‘you can’t do that!’ But if we want bailing out how can we justify giving millions to other countries?

sorry if this is a stupid question!

Well, we could tax the rich. But no, that’s too sensible, I expect we’ll let in the sort of people our grandparents fought in the war, and then after a few years we WILL be paying. And they’ll get richer, as Putin and Trump have.

I think the Republic of Ireland got a massive IMF bailout around 2008 when the financial crash happened. Seems they used it wisely as it's booming there now. Until Trump puts exorbitant tariffs on its pharma and tech I suppose though!

I'd be concerned about the financial state of the UK right now. But I'm not going to worry about it, that's what we elect the Government for. Let them sort it out for us. There was a huge tightening of belts in ROI at that time, including tax rises, spending cuts, wage stagnation or reduction etc. and so on. That might be facing UK too IMF or not.

Can you think of any reasons we don't tax the 'rich' more?
I mean it sounds like a brilliant idea, but maybe someone with more nous than you has ruled it out for some reason?

Taxing the rich will bring in pennies relative to the overall tax take, but it's got good optics so they should try something to keep the peace and make it look like it's equitable. It never will be.

We do tax the rich. We have very progressive taxation. If we try to tax them more, we will get even less revenue. It’s called the Laffer Curve. https://en.m.wikipedia.org/wiki/Laffer_curve

It sounds easy to just tax the rich. But we have already exploited that to the fullest. We must improve productivity and grow the size of our economy.

One would have thought that the Government would be trying to push the Assisted Dying Bill through at 'breakneck speed'(!)

The last time I looked the cost of borrowing by the UK government set by the bond market was roughly 50% more than that set for France, even though their debt was significantly higher. I think that says the bond buyers / lenders think the UK is a bigger risk i.e. not a great prospect when it comes to sorting out the structural debt of the UK.

As a previous poster has said, any bail out by the IMF is going to come with strings attached to reduce spending - and this government has to be the most clueless when it comes to that - it's just not in their vocabulary.

Do you know of any recent analyses of where the UK currently is on the curve? Lundberg's modelling, as cited in your link, suggests that we're well to the left. But that's from 2017 - I'm struggling to find anything more up to date.

No, I don’t. It’s just my feeling/estimation that we are pushing the limit from what I hear on the news. (I watch BBC.)

This was from 24/08 linking to Telegraph article of 23/08 re UK IMF bailout as referenced by @GCAcademic.

https://www.mumsnet.com/talk/_chat/5397791-i-dont-think-we-are-a-rich-country-anymore

Too many pensioners, innit

We have the same issue

We do tax the rich. We have very progressive taxation. If we try to tax them more, we will get even less revenue.

We need to tax wealth more not income as we have too much inequality particularly intergenerational inequality

We do tax the rich, a lot.

Here is the marginal tax rate by earnings courtesy of the IFS