Gordon Brown: World is ‘sleepwalking’ into another financial crisis

Written by John Johnston on 13 September 2018 in News

Former prime minister makes warning ahead of the ten year anniversary of the financial crash

Gordon Brown - PA

Former PM Gordon Brown has warned that the world is “sleepwalking” into another financial crisis on the ten-year anniversary of the start of the previous crash.

The former Scottish MP warned that the danger of another financial meltdown was high because the world was currently “leaderless”.

Brown, who led the UK response when a number of Wall Street banks collapsed and worldwide markets were thrown into turmoil in 2008, said there needed to be a “severe awakening” to the growing risks of a fresh crash.

Speaking to the Guardian, he said: “We are in danger of sleepwalking into a future crisis.”

“There is going to have to be a severe awakening to the escalation of risks, but we are in a leaderless world.”

Brown argued the approach to trade tarrifs by US president Donald Trump would heighten mistrust between governments and make a coordinated response impossible.

“The cooperation that was seen is 2008 would not be possible in a post-2018 crisis both in terms of central banks and government working together”, he said.

“We would have a blame-sharing exercise rather than solving the problem.

“There wouldn’t be the same willingness to cooperate, but rather a tendency to blame each other for what’s gone wrong."

He added: “Countries have retreated into nationalist silos and that has brought us protectionism and populism

“Trump’s protectionism is the biggest barrier to building international cooperation.”

The former Labour leader also admitted that his party should have done more to crack down on bad behaviour in the City ahead of the 2008 crash.

He said: “We did not know what was going on in some of the institutions, some of it illegal, and which was being covered up."

And he added: “The penalties for wrong-doing have not been increased sufficiently. The fear that bankers will be imprisoned for bad behaviour is not there.

“There has not been a strong enough message sent out that government won’t rescue institutions that haven’t put their house in order.”

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