Britain may have to seek IMF rescue – George Soros

The man who made $1 billion on Black Wednesday in 1992 told The Times that Britain was particularly vulnerable to the economic crisis.

Mr Soros – speaking days after an auction of government bonds failed for the first time in 14 years, ringing alarm bells about Britain’s ability to fund its growing debts – said there was a possibility that Gordon Brown would have to beg for billions of pounds in international aid. He also said that next week’s G20 summit in London was the last chance to avert a full-scale depression that could prove worse than that in the 1930s.

“You have a problem that the banking system is bigger than the economy … so for Britain to absorb it alone would really pile up the debt,” he said. Asked about the chances of Britain having to seek help from the IMF, he said that if the banking system continued to collapse, it was “a possibility”. At this stage, he added, it was “not a likelihood”.

He was not optimistic about the G20 meeting, saying the odds were that it would fail because there were so many differences of opinion. The price could be years of economic devastation worse than the Great Depression. “It is really a make or break occasion.”

It would be a disaster if the meeting was allowed to turn into a talking shop, he said. “It’s not enough to state general principles. You’ve got to come up with practical measures that are going to provide protection to the developing world, periphery countries, against a storm that originated from the centre, against a calamity that is not of their own making.”

He spoke amid more gloom over the British economy after official figures showed that output shrank by a worse-than-expected 1.6 per cent in the final three months of 2008. It represents the biggest fall in output since April-June 1980.

Mr Soros refused to blame Mr Brown for failing to prevent the crisis. “He underestimated the severity of the problem but so did most people. Part of the perceived role of a leader is to cheerlead so you can’t really blame him for that.”

Britain has not sought IMF help since 1976 when, with inflation approaching 27 per cent, Denis Healey, then the Chancellor, applied for a loan, shredding confidence in the Labour government. The Times (UK)