Brexit warnings over repeat of 2008 financial crisis

Written by Tom Freeman on 10 August 2017 in News

Anniversary of financial crash marked with warnings over 'complacency' in the market

Alistair Darling - PA

Former chancellor Alistair Darling and Liberal Democrat leader Vince Cable have issued warnings over repeating the mistakes which led to the financial crisis in 2008.

The warnings come ten years after problems in the US securities market led to banks quickly shutting down investments streams and running into difficulty.

Darling, who himself became chancellor in 2007, went on to bail out UK banks with vast amounts of taxpayers money, including the part nationalisation of RBS.

The crash is still given as one of the reasons for the UK Government's programme of austerity.

Darling told BBC Radio 4's Today programme there was a risk of "complacency" in the financial markets.

"The lesson from 10 years ago is that something that can start as apparently a small ripple in the water can become mountainous seas very quickly," he said.

The uncertainty of Brexit coupled with rising consumer debt meant that a rise in interest rates would mean regulators would need to be "sharp".

Yesterday Bank of England deputy governor Sam Woods warned posed "a material risk" to the aims of the bank's regulatory arm, the Prudential Regulation Authority.

Lib Dem leader Cable said the warning showed how the UK Government should "step back" from its Brexit strategy.

“The warnings from the financial regulator have to be taken seriously," he said.

"He has no political axe to grind. And the Bank of England has to be on guard.  The 10th anniversary of the beginnings of the banking crisis is a reminder of what happens when warnings of financial instability are not taken seriously enough.

 "His point is that not merely is the City exposed to the risk of losing business with the loss of passporting rights as we leave the Single Market; it is also exposed to financial instability if a major economic crash forces individuals and companies to default on their loans."

Tags

Categories

Related Articles

Unemployment and employment figures both rise in Scotland
19 October 2017

Scottish unemployment rises by 9,000 as the number of people in work rises by 40,000

Living standards to be hit as inflation rises to five year high
17 October 2017

Inflation increased to three per cent in September, according to ONS figures published today

OECD issues stark economic warnings over Brexit
17 October 2017

OECD warns Brexit economic fallout will continue, and made worse by a 'no deal' option, Scottish independence or breakdown of the Irish peace process

Share this page