LONDON — Former Chancellor Lord Darling has urged regulators to be “very, very” vigilant about threats to Britain’s economy as Brexit is causing “massive uncertainty.”
Speaking 10 years on from the beginning of the 2007 financial crisis, Darling said that rising levels of consumer debt should be a cause of growing concern and warned against “complacency” as Britain prepares to leave the European Union.
“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,” the former Labour MP BBC Radio 4’s Today programme on Wednesday morning.
The Labour peer added that the economy had since the crash grown with the “odd stutter” but expressed concern that Britain’s departure from the EU will trigger a major slowdown in growth.
The negative impact of Brexit, combined with increasing levels of consumer debt, ought to “raise alarm bells” for an economy so reliant on consumer spending, he added.
“When interest rates go up, and they will go up, if not this year then certainly next year, and suddenly people find they are going to be paying more in their monthly payments, that’s when you need to watch out.”
Lord Darling’s remarks that of Sam Woods, CEO of the Bank of England’s Prudential Regulation Authority, who in July expressed concern that banks were taking less notice of warning signs and forgetting the lessons of 2007.
“As survivors, societies here today ought to be well aware of the warning signs, but I’m conscious that corporate memories can be shed surprisingly fast,” Woods said in a speech.
He added that he seen a potential return “to the punchbowl,” highlighting concerns that some banks are loosening their internal controls to create more credit and boost risk.
“I would observe that part of the reason why only 44 societies are attending this conference rather than the 60+ that came to its equivalent in 2004 lies in the fact that many of those societies were unaware of, or failed to control, the risks they were taking.”
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