Conservative leader Kemi Badenoch has warned that Britain could face a humiliating bailout from the International Monetary Fund (IMF), drawing parallels with the 1976 sterling crisis.

Speaking in a BBC interview, as reported by PUNCH Online on Tuesday, Badenoch expressed concern that without a clear economic growth strategy, the UK may be forced into international assistance similar to when Labour Prime Minister Jim Callaghan’s government secured a $3.9 billion IMF loan to support the pound nearly five decades ago.

Badenoch accused Prime Minister Keir Starmer’s administration of trapping the country in a “doom loop” of rising taxes, fragile public finances, and soaring borrowing costs. She argued that Labour’s failure to prioritise growth risks pushing Britain toward fiscal instability.

“A lot of the indicators are pointing in that direction,” she said. “We are not growing enough. If Labour continues with no plan for growth, we’ll end up going to the IMF cap in hand. Many very well respected commentators and economists are saying this.”

Her remarks come as bond markets pressure the government, with UK borrowing costs recently climbing to their highest levels in 27 years before easing.

Labour responded sharply, accusing Badenoch of “astonishing hypocrisy.”

“Kemi Badenoch’s Conservatives crashed the economy and sent mortgages spiralling. The brass neck to offer advice now is beyond belief,” a Labour source said.

The warning echoes concerns raised by some economists, including Andrew Sentance, a former member of the Bank of England’s Monetary Policy Committee, who noted “eerie parallels” between today’s situation and the 1976 crisis under Chancellor Denis Healey. However, he concluded in a recent article that the UK may avoid seeking IMF assistance.

The 1976 crisis, marked by high inflation, a collapsing pound, and rising debt, eroded investor confidence and forced the Labour government to secure the largest IMF loan in history at the time. The episode dealt a severe blow to Labour’s economic credibility and set the stage for Margaret Thatcher’s market-driven reforms in the 1980s.