City sees crisis signs

TEN years ago tonight, the BBC’s Robert Peston broke the news that the Bank of England had been forced to step in to rescue Northern Rock from collapse, prompting thousands of panic-stricken customers to queue to withdraw their savings over the following days.

This was the first outward sign of a greedfed cancer infecting the financial system. Indeed, it marked the start of an epic crisis, the consequences of which we still suffer.

With businesses driven to the wall and taxpayers stung for hundreds of billions of pounds in bailouts, the public finances were laid waste. Government borrowing soared – and debt is still rising in 2017, towards an unimaginable £2trillion.

Meanwhile, household incomes have been painfully squeezed, while savers and pension funds have been hammered by a decade of low interest rates.

Yet ten years on, no banker has been jailed for the sharp practice that brought this country to the brink of ruin. Nor has there been a comprehensive inquiry to establish the lessons of the crisis.

That is deeply worrying and, indeed, there are abundant signs that the cancer is back with a vengeance. As greedily as ever, bankers are inflating a debt bubble – handing out excessive mortgages, cheap loans for luxury cars and credit cards with zero interest rates fixed for months.

Meanwhile, the racket of trading bundledup packages of sub-prime debt continues as if nothing untoward happened in 2007.

Now, as then, the banks have far too little capital in reserve to weather any coming storm. The difference is that in 2017, with taxpayers milked dry, the Government will be unable to mount a bailout on anything like a similar scale.

With warning signs everywhere, the City must act now to shore up its defences. Otherwise, there can be no telling how the next crisis will end.