Former British Prime Minister Gordon Brown warned that the world is on the verge of sleepwalking into another financial crisis because governments have failed to tackle the causes of the last major financial crash a decade ago.
Britain’s leader when the collapse of the U.S. investment bank Lehman Brothers triggered the worst financial crisis since the Great Depression said the world is leaderless and was now entering a period of vulnerability.
“We are in danger of sleepwalking into a future crisis,” Brown told The Guardian.
“There is going to have to be a severe awakening to the escalation of risks, but we are in a leaderless world.”
Brown said the global economy had failed to introduce an early warning system and a system for monitoring financial flows so that it was possible to tell where money had been lent and on what terms.
“We have dealt with the small things but not the big things,” Brown, who was British prime minister from 2007 to 2010, said.
Brown said action against financial wrongdoing had not been tough enough and many banks would expect to be bailed out again in the event of a future crisis.
“The penalties for wrong-doing have not been increased sufficiently,” he said.
“The fear that bankers will be imprisoned for bad behavior is not there. There has not been a strong enough message sent out that government won’t rescue institutions that haven’t put their houses in order.”
Brown said the international cooperation that helped tackle the global financial crisis ten years ago may not exist today because countries have become more protectionist.
“The cooperation that was seen in 2008 would not be possible in a post-2018 crisis both in terms of central banks and governments working together.
“We would have a blame-sharing exercise rather than solving the problem,” he said. (Reuters/NAN)