Britain’s economy, and subsequent exchange traded fund (ETF), may be stuck and the country might have to turn to the International Monetary Fund (IMF) for aid.

As Britain continues to grapple with an ongoing recession, job losses are growing and the burden of debt is piling on, reports Landon Thomas Jr. for The New York Times.

Former Prime Minister Margaret Thatcher has even suggested that the government should look for loans from the IMF like it did back in Britain’s deep recession of 1976. Speculation that Britain may go to the IMF depends on the severity of debt and faltering banking sectors.

Back in 1976, foreign investors unloaded sterling holdings after a collapse in confidence of the British currency. Now, government officials are wary of the possible currency attack that may result because of increases in spending and cutting taxes.

This year, Britain’s budget deficit is estimated to be 11% of GDP. Without spending cuts and tax increases, analysts project debt to climb up to 80% from current levels of 40%  in a couple of years. Investors still have faith in the British pound and are willing to finance Britain’s debt at low rates.

• iShares MSCI United Kingdom Index (EWU): down 6.5% year-to-date

Tags: Europe, EWU, Global ETFs, United Kingdom