Britannia Radio

This is a global report but its criticisms and warnings are sharpest 
for Britain.  Chancellors always face a gruelling time with their 
Budgets but this bombshell for breakfast will do nothing to steady 
Darling's nerves.

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TELEGRAPH 22.4.09
IMF says UK facing bailout bill of £200bn
The UK faces a bill of almost £200 billion for propping up its ailing 
banking system, the International Monetary Fund (IMF) has said.

Its latest Global Financial Stability Report estimated the cost of 
support measures would run to 13.4 per cent of the UK's entire 
economic output of £1.46 trillion in 2008.

Only Ireland would pay more as a percentage of its output to rescue its
banks, the IMF added.

  The report delivers a fresh blow to Chancellor Alistair Darling on 
the eve of todays Budget, which will unveil soaring public debt and 
the worst year for the economy since the end of the Second World War.

UK banks would also face a $200 billion (£137 billion) hit over the 
next two years as bad debts soared, the IMF said.

Overall global losses could total $4 trillion (£2.7 trillion) by the 
end of 2010 as growth declined, it estimated.
"The global financial system remains under severe stress as the 
crisis broadens to include households, corporations, and the banking 
sectors in both advanced and emerging market countries," the IMF warned.

The huge rise in borrowing to fund bail-outs has seen the cost of 
insuring against governments defaulting on their debts rise - with 
the UK more affected than other large economies, the IMF said.

Mr Darling faces pressure to plot a long-term path back to health for 
the public finances in the Budget, in particular to reassure the bond 
markets which will be tapped up for billions to fund higher borrowing.

"In order to address investor concerns, governments need to clearly 
communicate the potential costs of financial support packages as part 
of a sustainable medium-term budget framework, including a credible 
commitment to fiscal correction once economic conditions improve," 
the report warned.

The IMF added that the crisis would require "far-reaching changes" in 
the shape and functioning of financial markets and a toughening-up of 
regulation.

"Since neither market discipline nor public oversight were sufficient 
to properly assess and contain the build-up of systemic risks, 
improved financial regulation and supervision are key components to 
preventing future crises.
"The emphasis should be on how to detect and mitigate systemic risks 
through better regulation," it said.

Shadow Chancellor George Osborne said the IMF estimates showed the 
"potentially massive cost of Gordon Brown's utter failure to regulate 
the banking system".
"Gordon Brown told us last autumn we would be making money out the 
bailouts. This couldn't be worse news on the eve of the Budget.
"It blows apart the myth that Britain was better prepared for the 
recession than other countries," he said.