The Conservative leader, Kemi Badenoch, has warned that Britain risks a humiliating IMF bailout, drawing parallels with the 1976 sterling crisis.

According to a BBC interview and cited by PUNCH Online on Tuesday, she expressed deep concern that without a robust economic growth plan, the UK could face a repeat of the scenario where Jim Callaghan’s Labour government secured a $3.9bn IMF loan to prop up the pound nearly five decades ago.

Badenoch accused Prime Minister Keir Starmer’s administration of driving the UK into a “doom loop” of escalating taxes, fragile public finances, and surging borrowing costs.

She argued that Labour’s failure to prioritise growth could push the nation toward fiscal ruin, forcing it to seek international aid.

Her intervention comes as bond markets rattle the government, with UK borrowing costs recently hitting a 27-year high before easing.

Asked what made her think the UK is heading towards the need for an IMF bailout, Badenoch said: “A lot of the indicators are pointing in that direction.

“We are not growing enough. If Labour continues with no plan for growth, we’ll end up going to the IMF cap in hand,” Badenoch said.

“Many very well respected commentators and economists are saying this.”

Meanwhile, Labour hit back sharply, blasting her warnings as “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 fired.

Several economists, mainly on the right, have in recent weeks raised the prospect of a version of the 1976 sterling crisis repeating itself. Other economists have dismissed this as hyperbole.

Andrew Sentance, a former member of the Bank of England’s Monetary Policy Committee, wrote of “eerie parallels” between the position of the current chancellor and that of the late Denis Healey, the chancellor during the 1976 sterling crisis.

But in an article for the Sun last month, Mr Sentance concluded: “The UK may not end up calling in the IMF.”

In 1976, under Labour Prime Minister Jim Callaghan and Chancellor Denis Healey, the UK was facing crippling inflation, a collapsing pound, and rising debt.

Investor confidence plummeted, sparking a currency crisis that forced the UK to seek a $3.9 billion loan from the IMF—the largest in IMF history at the time.

The event was seen as a national humiliation and significantly damaged Labour’s credibility on the economy, paving the way for Thatcherite economic reforms in the 1980s.