‘Caution, caution, caution’ Ordinary Britons must CHANGE or economic crisis is INEVITABLE
CONSUMERS must be aware of the dangers of a new global economic crash and take extreme caution, the senior deputy speaker of the House of Lords has said.
Lord John McFall: We need to be very cautious of banks
John McFall, who was chairman of the Treasury Select Committee, said households were failing to save and a section of the mortgage market was growing at a significant rate, all contributing to a financial disaster.
Speaking on the Today programme on BBC Radio 4, Lord McFall said consumers should take note of the lead up to the last economic crash.
Leading figures played down fears of an economic calamity before the 2007 crash.
He said: “Households are saving the lowest proportion of their income since 1963.
Lord McFall said consumers should remember warnings leading up to the 2007 financial crash
Households are saving the lowest proportion of their income since 1963
“The buy-to-let mortgage market is growing by more than £100 billion since 2007 and we all know that house prices, particularly in London, remain very high and have exceeded their peak in 2007.
“What I would say to people, and it’s a lasting memory for me, at the time of the financial crisis, is that nobody knew what was going on.
‘The IMF in 2006 came out and said it was a more resilient system, Tim Geithner [former US Treasury Secretary] said that we should be optimistic about the future and indeed the treasury committee, the governor at the time, came and said our banking system was much more resilient than in the past.
“The problem was that that remark was made in August 2007, so it reinforces my point for caution, caution and caution.”
Meanwhile, Alistair Darling warned “alarm bells are ringing” saying rising consumer debt could spiral into a global financial crash in the face of Brexit.
The former chancellor said rising levels of debt should be of major concern as the UK economy is so dependent on consumer spending.
Lord Darling added he was concerned the economy was not starting to slow down again and Brexit was causing “massive uncertainty”.