Brexit warnings over repeat of 2008 financial crisis

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."