It was 10 years ago when the financial crisis hit the UK, and today, former chancellor of the exchequer, Lord Alistair Darling cautioned that there could be another. 

Speaking on BBC Radio 4’s Today Programme, the former chancellor reminisced on the events that unfolded as the crash began to engulf the country, outlining “the most scary moment” of the crisis. “I had to go to one of these meetings of European finance ministers, and I was asked to come out and take a call from the then chairman of RBS (Tom McKillop) who said the bank was hemorrhaging money. Remember this was not only the biggest in the word, it was about the same size as the entire UK economy,” he said. “I said to him, ‘How long can you last?’ And what he said shook me to the core. He said, ‘Well we’re going to run out of money in the early afternoon,” he continued. The consequence of the downfall of RBS was that the government had no choice but to nationalise the bank before it collapsed. 

Alistair Darling became chancellor of the exchequer in June 2007, just two months before French bank, BNP Paribas shut down several investment funds. This event is broadly regarded as the beginning of the global financial crisis. 

Darling highlighted that the increasing levels of consumer debt should not be brushed under the carpet and should tackled by the government and by the regulators head on, as the UK economy is extremely dependent on consumer spending. He also added that Brexit had created “massive uncertainty” and that everyone has to remain vigilant. “The lesson from 10 years ago is that something that can start apparently as a small ripple in the water can become mountainous seas very quickly. When interest rates go up, if not next year then certainly next year, and suddenly people find that they are going to be paying more in their monthly payments, that’s when you need to watch out,” he said on the radio talk show.

However, the former chancellor did accept the fact that the economy has grown over the last eight years, albeit with “the odd stutter,” but he warned that complacency was a danger. “The biggest danger is when you get complacent about things. The next crises will probably come from where it wasn’t really expected, from causes that haven’t yet been identified,” he said. 

Alistair Darling wasn’t the only politician that went down memory lane. Jack Lew, former US treasury secretary was also on BBC Radio 4’s Today Programme and recalled the chaos that unfolded 10 years ago. “I’d never seen a situation where every single day numbers were so much different and worse than the day before that you had to come back and keep revisiting how much fiscal stimulus the economy would need in order to stimulate a recovery.” 

Since the financial crisis, both the UK and US have enforced banking regulations in an effort to prevent another financial downturn, however, bankers from both sides of the Atlantic seem to have short memories and have indeed become complacent. They are finding ways to sideline the regulations in order to dish out risky loans for complex investments. 

Further warning of a potential financial crisis has also come from within the financial industry. Mark Burgess, chief investment officer for Columbia Threadneedle Investments, highlighted that the recent volatility of Sterling, due to Brexit, along with a weakened negotiating position would mean that the UK might get a softer Brexit. A sigh of relief for Tory Remainers but a headache for Tory Leavers. 

Burgess added that the continued negotiations and the growing uncertainty that shrouds Brexit, has resulted in expectations of UK growth moderating as UK-based businesses ponder on whether to relocate their headquarters to other parts of Europe. He also outlined that low consumer confidence – with consumer spending being vital for UK GDP – along with the uncertainty of what kind of relationship the UK will have with Europe after Brexit takes effect, has also played a part in dampening expectations of further UK growth.  

There are some that don’t believe that another financial crisis will happen. Sir John Gieve, former deputy governor for financial stability for the Bank of England told Radio 4’s Today Programme: “I don’t think we’ll see a repeat of what happened 10 years ago because banks have far more capital, there are far more regulations on their liquidity and funding which was a big issue then, and of course they have spent the last 10 years dealing with the problems raised…so there isn’t the exuberance that we certainly saw then.” 

Despite Gieve’s confidence, he did raise concerns about China’s financial activity that could have a domino effect on other world economies. “The main debt which threatens a sudden break is probably in the far east and China which has been running a credit binge now for a decade and is showing signs of over-extension,” he said.