Bloody hell….. never seen so much vigorous agreement from STW!
I really sympathize – you’ve been put between a rock and a hard place.
However, the lesser of the two evils here (by quite a long way) is upsetting your wife/MIL. No offence, but it sounds like it will happen at some point in the future anyway – this seems as good a time as any to make a stand.
My advice is that you don’t allow yourself get drawn-in to all the various facets of this situation…. don’t end up having an argument about your BILs spending habits, or what a nightmare your MIL is, or what house he wants to buy etc etc.
Just answer the question “will you be my guarantor” – then back away, go to the shed and stay there until its all sorted out.
I would suggest: ‘I’d really love to help you out, but with the wife giving up work for the next few years to retrain, an the instability in my sector, we are really not in a position to at the moment. Sorry about that”.
Any attempts to cajole should be met with: “I’m really sorry, but as I’ve said, we just can’t at the moment”, followed by: “I’m just off to the shed”.