Former chancellor of the exchequer Alistair Darling has pointed to strong parallels between the banking crisis of 2007-09 and the crisis the UK will face if it plunges into a no-deal Brexit.
Lord Darling, who is also a non-executive director of US investment bank Morgan Stanley, said at last week's PLSA Investment Conference the situation was as serious as it was ten years ago.
The government of which he was part had bailed out banks including RBS, Lloyds and HBOS at the height of the banking crisis more than a decade ago.
Lord Darling said: "We are 21 days away from the possibility of leaving the European Union without any deal and walking blindfolded into a future which is completely unknowable and one for which we haven’t planned and indeed we cannot plan for."
He added that even Theresa May’s Brexit deal would still presage two years of uncertainty for the UK, as "all it is is an exit deal".
Irrespective of the manner in which Britain leaves the EU, Darling said the effects of Brexit would make themselves felt for years, and their severity was likely to be exacerbated by other negative global trends, including "the spectre of trade wars, the growth of a narrow nationalistic and protectionist world view".
Lord Darling said some of the proposals for leaving the EU, including the no-deal favoured by hard Brexiteers and Conservative MPs in the European Reform Group, would be "absolute madness" and "reckless in the extreme".
He said the current chancellor Philip Hammond would have to look for some sort of economic stimulus in the event of a no deal Brexit and that the Bank of England would also have to take action.
Lord Darling said one of his key worries was that the leading economies of the world were much more fragmented and less likely to co-operate to help resolve a crisis than they were in 2008-09.
He said: "If you look at today’s problems - whether it’s trade, climate change, the issues of data protection, cyber attacks, financial stability - none of that is possible to properly address, unless you get international cooperation, which today is under something of a strain."
The fragmentation has stemmed from the post-crisis rise of nationalism and protectionism, the rise of isolationism in America, and the election of Donald Trump, who has made no secret of his lack of faith in supranational institutions and desire to upend the international order.
Lord Darling blamed the austerity policies of his successor George Osborne’s for falling standards of living, people having lower expectations, and a sense of hopelessness amongst Britons, which had in turned fuelled the Brexit vote of June 2016.
He suggested that Brexit was "a proxy for a generalised discontent where people have become uncertain and untrusting of institutions and of politics and politicians".
Lord Darling warned that amidst this societal disenchantment, there was "a real danger for [the] pensions sector".
He said if people lost trust in the institutions of the pensions sector savings would fall.
He said he was deeply concerned about the extent to which people around the world are "trashing institutions".
Lord Darling also said he was concerned that politics was "being pulled by the extremes at either side" and added that the UK and other countries needed better leadership.
He argued with more astute political manoeuvring, a Brexit vote could have been avoided and the UK could have won some concession or a commitment to reform from Brussels.
He said: "Brexit is a self-inflicted wound and it's one for which our children will think very badly of us if we don’t sort it out.
"The big question for us is what are our long term relationships with the EU and with the US going to be? What is the tariff regime going to be? There is no easy answer, especially when you consider that the going rate to fix a trade deal is seven years."
He also said that all the political focus on Brexit meant other big issues like long-term saving structural issues in the workplace get ignored.
But he said the desire for another referendum on Scottish independence was "very low" as people in Scotland were "referendumed out".
Lord Darling has been chairman of the Standard Life Foundation, a research organisation which is independent from Standard Life Aberdeen, since February 2017.
He said the organisation was focused on topics including individuals’ financial resilience and long-term structural problems including the inter-generational divide.
Ian Fraser is a freelance journalist
