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Harder-Edged Warnings About Britain’s Economy

New York Times Original article ›

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Simon Johnson, former chief economist at the IMF, says Britain may have to turn to the IMF for assistance if those holding British assets lose confidence in the government's ability to pay its debts, and start abandoning the pound. This happened in 1976. In Johnson's view the bottom line is that there is abudget problem and a banking problem, and adjustments will need to be made - and these adjustments are easier to make with an IMF loan than without one. Britain's budget deficit is 11%of its GDP compared with 13% forecast for the USA for 2009. And government debt which is 40% now is expected to go up to 80% of the overall economy in coming years, even 100%. The ratio approaches 80% in troubled economies like Italy and Greece.

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Harder-Edged Warnings About Britain’s Economy

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