The 1976 IMF crisis revisited

In 1976, the British government went ‘cap in hand’ to the International Monetary Fund to secure a foreign currency loan to prevent a further slide in the value of sterling. The currency was already under pressure due to the poor state of the UK’s Balance of Payments and weak public finances. A further decline in sterling raised the spectre of even higher inflation during an unprecedented post-war inflationary era. This commentary revisits the IMF Crisis – a momentous event in Britain’s post-war economic history – and offers some brief reflections on the lessons it holds for today.