Explaining his concerns, Edwards said: “History suggests that when UK saving ratios, measured gross, declines to, or below, the US saving ratio measured net, as we saw in 1987 and as we see now we in the UK are sitting on a massive credit bubble that is primed to burst with recessionary consequences.
“Alarm bells will be ringing all around the Bank of England but it is too late.”
Fred Hervey, CIO at Lincoln Private Investment Office, also accepts there is “every possibility we will have another crisis”, but gives the banks an easier ride and suggests it may not lead to as big a crisis as we saw 10 years ago.
“I think there is still this deep-rooted cynicism about the complexity of their balance sheets, but unquestionably they are financially more secure and have significantly higher capital base. There is every possibility we will have another crisis, but I don’t think it will be precipitated by the banks in the same way.
“I think the risk is we’re in a better position to cut one loose without the associated knock-on and that has got to be a positive,” he said.
