UK on the Brink of Economic Collapse

By Staff, Agencies

Britain is facing the prospect of a repeat of its crippling 1976 economic crash as soaring debt and borrowing costs raise doubts over Labour’s budget policies, leading economists have warned, according to a Telegraph report.

Fifty years ago, a Labour government sought an International Monetary Fund [IMF] bailout amid soaring deficits and inflation, leading to severe cuts and Labour’s eventual loss of power.

Now Chancellor Rachel Reeves faces similar warnings, with forecasts showing a £50 billion ($68 billion) gap in the public finances and debt interest set to exceed £111 billion.

Debt exceeds 96% of GDP at £2.7 trillion, one of the highest in the developed world, with 30-year bond yields over 5.5%, surpassing the US and Greece.

Jagjit Chadha, former head of the National Institute for Economic and Social Research warned the Telegraph that Britain’s outlook is “as perilous as 1976” and may struggle to fund pensions and welfare.

Andrew Sentance warned Reeves risks causing a 1976-style crisis by 2025–26, blaming Labour’s higher taxes, borrowing, and spending for fueling inflation.

Weeks before Reeves’s autumn budget, expected to include tax hikes, critics warn this could worsen the downturn amid growing political and economic challenges for Labour.

On Saturday, Reform UK’s Nigel Farage called it “the 1970s all over again,” while Conservative Kemi Badenoch blamed soaring borrowing costs on Labour’s “economic mismanagement.”

London plans to raise military spending to 2.5% of GDP by 2027, supporting NATO and Ukraine, adding strain to already tight public finances.