UK may need IMF bailout unless Brexit renegotiated, says City finance chief

Britain may need a bailout from the International Monetary Fund (IMF) and is on the path to becoming the “sick man of Europe” because of Brexit, a senior finance chief has warned.

Former Conservative donor Guy Hands, founder of private equity company Terra Firma, launched a scathing attack on the party.

Pointing to Brexit as a key reason for economic turmoil, Mr Hands said the Tories needed to admit to “mistakes they’ve made in the last six years, which have, frankly, put this country on a path to be the sick man of Europe”.

Asked if the Tory party was fit to govern, the top financer told BBC Radio 4’s Today programme: “No”, adding: “It’s got to move on from fighting its own internal wars.”

Calling for Liz Truss’s successor to renegotiate with the EU for smoother trade, the Terra Firma founder said: “The Brexit that was done is completely hopeless and will only drive Britain into a disastrous economic state.”

Mr Hands said the Tories now had to “own up to the mistake they made and how they negotiated Brexit” and put in place someone with the “intellectual capability to renegotiate Brexit”.

Without a major change of course on post-Brexit policy, the economy “is frankly doomed”, Mr Hands added.

Asked what he meant by doomed, he warned that Britain was on a path towards “steadily increasing taxes, reducing benefits and social services, higher interest rates and eventually the need for a bailout from the IMF like we [had] in the 1970s”.

Mr Hands said he wanted to be honest about the bleak scenario, despite his inclination to “speak positively” as a business investor.

He said he was worried by “poverty which is moving up the economic level”, adding: “It’s now middle-class people who will not be able to pay their mortgages when they are reset, who are finding it difficult to make ends meet. It will move across the whole of society.”

Rishi Sunak, announced as the new Tory leader on Monday, had vowed to press on with the highly controversial Northern Ireland Protocol Bill – which would hand UK ministers the power to unilaterally override parts of the Brexit deal.

Liz Truss had reopened talks with Brussels on reaching a compromise on protocol checks before her shock resignation, but Mr Sunak has not given any indication of whether he wants to push for a speedy compromise deal.

On Monday, Northern Ireland Office minister Steve Baker urged the DUP to “choke down” its position on the protocol and refusal to re-enter Stormont power-sharing so that a winter election can be avoided.

Chris Heaton-Harris, the Northern Ireland secretary, made it clear he will call a fresh poll if a deadline passes this Friday, with 15 December the likely date.

But DUP leader Sir Jeffrey Donaldson said that Mr Sunak must ditch the protocol if he wants to see power-sharing restored.

“The protocol is incompatible with the restoration of devolved government in Northern Ireland – if the prime minister wants to see a fully functioning Stormont, then he must deal with it once and for all,” he said.

Irish premier Micheál Martin said that the decision of the DUP not to participate in the Stormont executive runs “counter to democracy” and risks undermining the faith in politics.

Meanwhile, Sir Keir Starmer said again he wanted to “make Brexit work” when asked about rejoining the single market under a Labour government during an LBC interview.

The Labour leader said “it’s a straight no from me” when asked about a customs union and single market. “We do think that we should make Brexit work ... I think we’ve got to make it work now.”