Britain’s ‘sleepwalk’ into crisis warning

SIR VINCE Cable has warned that Britain is “sleepwalking” towards another economic crisis and has become hooked on unsustainable debt.

The former business secretary said the UK economy needed a new approach to prevent it being dragged into recession as Britain edges closer to Brexit.

His comments come as the banking industry marked a decade this week since Northern Rock marked the start of the financial crisis, which saw the lender crash into Government ownership following a full-blown liquidity crisis.

The Liberal Democrat leader, who is widely credited with predicting the credit crunch of 2008, said: “Ten years on since the collapse of Northern Rock, Britain is sleepwalking into another economic crisis.

“Banks are now safer and better capitalised, and the Liberal Democrat policy in government of splitting retail banking from more risky ‘casino banking’ has added to stability.

“But despite progress made during the coalition years, the country has still not fully recovered from the economic heart attack it suffered a decade ago.”

Bank customers sparked a run on Northern Rock in 2007 after the lender’s reliance on the wholesale markets, as opposed to customer deposits, left it dangerously exposed when the subprime mortgage crisis struck the United States.

Lengthy queues formed at cash points and shares in the bank tanked, as liquidity dried up and Gordon Brown’s Labour Government was forced to ensure its future in February 2008 by taking it into public hands.

The Government went on to throw a lifeline to three of the UK’s biggest banks - Royal Bank of Scotland, Lloyds TSB and HBOS.