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Fears are rising that England may have to turn to the International Monetary Fund for emergency rescue funds, becoming the first Western European country to do so after the global economic crisis erupted in September of last year. In 1976, England received US$3.9 billion in emergency funds from the IMF. Some experts say the country's fiscal deficit and levels of insolvency at financial institutions are as serious as they were back in 1976.
The overall economic atmosphere in England this year is similar to the conditions of 1976. The European Commission estimates England's fiscal deficit in 2009 would amount to 9.6 percent of its gross domestic product (GDP), while the IMF forecasts it to swell to 11 percent of GDP. The New York Times reported on Wednesday that economic experts are warning that England's accumulated sovereign debt, presently equivalent to 40 percent of the size of its economy, would surge to 80 percent next year, unless the government drastically cuts back on spending and raises taxes.
Other Western European countries, such as Iceland, Spain, Italy and Greece, are also facing similar problems. But England does not use the euro and is sticking to the pound, making it more vulnerable in terms of currency stability, experts say. Its financial institutions are also heavily exposed to risky loans, experts say.
British Prime Minister Gordon Brown has indicated he has no intention of seeking the help of the IMF. Brown is expected to announce a budget draft that cuts back on fiscal deficit, in order to avoid having to turn to the IMF. But the New York Times said this was a move already attempted by former Labor Party PM James Callaghan back in 1976, which failed and resulted in England having to turn to IMF assistance.
(englishnews@chosun.com )
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