Bootle warns of another ghastly financial crisis
The managing director for Capital Economics and specialist adviser to the House of Commons Treasury Committee said he predicts the Eurozone will break up once Greece leaves the Euro and defaults within a matter of months.
He said: “I do believe there will be a ghastly financial crisis. Without the break-up of the Eurozone I don’t know how else the continent will recover. However, in the short term the implications for the UK will be nasty. The UK will continue with austerity and face a long slog back to prosperity.”
Mr Bootle made the comments at the Institute of Economic Affairs’ London seminar, The State of the Economy.
Speaking during a talk on the prospects for the UK economy, he also suggested inflation will sharply fall and interest rates will remain at near-zero for years.
However, he insisted that after the collapse of the Euro, which he added will not survive in it’s present form, the UK will see better times.
He said next year the UK economy may start to recover slowly.
Mr Bootle, who was formerly group chief economist at HSBC, blamed the downturn of the UK economy on many factors, including a drop in consumer spending, a reduction in lending to small businesses and a dwindling housing market.
He said: “We are in a pickle at the moment. But it’s important to remember that we have been in worse pickles in the past and we’ve gone on to recover and survive.”