Bank of England governor Mark Carney has warned that free markets will not survive growing inequality between the rich and the poor.
Speaking at the John Moores University in Liverpool, he said such a growing gulf undermined public support for open markets, particularly against a forecast of only modest growth for the economy.
"Turning our backs on open markets would be a tragedy, but it is a possibility," he said. "It can only be averted by confronting the underlying reasons for this risk upfront."
A typical millennial, he said, earned £8,000 less during their twenties than their predecessors. While since 2007, those over 60 have seen their incomes rise at five times the rate of the population as a whole.
More generally for the UK, he said the income share of the top 1 per cent tripled from 5 per cent in the early 1980s to 15 per cent by 2009, though it has fallen back somewhat since the crisis.
He called for economists to acknowledge the challenges of reducing inequality, including the realities of uneven gains from trade and technology.
"We must grow our economy by rebalancing the mix of monetary policy, fiscal policy and structural reforms," he said. "We need to move towards more inclusive growth where everyone has a stake in globalisation."
Carney also used the speech to defended the Bank's decision to lower interest rates.
"For those looking to borrow, credit is widely available. For those with debts, the cost is cheaper," he said. "Neither solely due nor totally unrelated to the actions the monetary policy committee took in August, growth appears to have been materially better than we had expected in the summer."
He added that he would stick to using monetary policy to stimulate the economy.
"Whatever economic developments and prospects, the MPC will always set monetary policy to maintain price stability and promote the good of the people of the United Kingdom. As it did when it was the only game in town after the global financial crisis; and as it will going forward, in better balance with fiscal and structural policies."
In October Mr Carney's deputy, Ben Broadbent, told a committee of MPs there was no evidence low interest rates had caused problems for pension schemes.
