Irish Examiner view: Bank of England intervention the latest chapter in a worrying tale

The IMF's commentary on the UK is worrying for us all, as any difficulty they go through could have global consequences 
Irish Examiner view: Bank of England intervention the latest chapter in a worrying tale

Observers point out that the International Monetary Fund's cautions about the UK's economy were akin to those the IMF issues to emerging markets. Picture: Andrew Harrer/Bloomberg

Readers may feel a shiver when they read about the International Monetary Fund casting a cold eye on affairs in this part of the world.

Just over a decade ago, the IMF sent a team to Dublin, led by Ajai Chopra, to take charge of our financial affairs as the effects of the recession truly hit home; little wonder the arrival of Chopra and co was viewed as a national humiliation, a yielding of our sovereign independence.

However, in this case, the IMF is not looking at Ireland, but at our neighbours across the Irish Sea. We have long since passed the point at which political developments in Britain can be described as anything other than extraordinary, but an IMF statement on Britain earlier this week was truly historic.

Criticising chancellor Kwasi Kwarteng’s controversial mini-budget last week on the grounds that it was likely to increase inequality, the IMF added: 

We are closely monitoring recent economic developments in the UK and are engaged with the authorities. 

This apparently mild phrasing hides a sharper reality, with observers pointing out that those IMF criticisms are more akin to the organisation’s dealings with emerging markets rather than a long-established economy such as Britain’s.

Then again, every day seems to produce another stunning headline in Britain’s internal travails. Only yesterday, the Bank of England was forced into a surprise intervention in the bond markets after being warned by investment banks and fund managers in recent days that the fall in bond prices had forced pension funds to sell bonds to meet margin calls.

This has serious implications for pension funds in Britain, for the financial markets as a whole, and for London’s basic viability as a global financial centre.

Lest there be any schadenfreude here as the UK flails around in a mess of its own making, however, former US treasury secretary Larry Summers has warned the crisis in Britain “could well have global consequences”.

Perhaps Ajai Chopra and his colleagues should get their raincoats out of storage and head for Heathrow.

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