The world economy will suffer another financial crisis because it failed to adopt much-needed reforms, Gordon brown, former Prime Minister and the Chancellor warned.
The entire global financial system needs “fundamental reform,” Mr. brown said. Such changes should have been put in place urgently, but the previous government did not make them a priority.
“One of my huge regrets that we have had proposals for reforming the global financial system, which pushes us forward,” said brown. “After we got the country out of the recession in 2009, we had a big agenda for transforming the international financial system.
“I’m afraid that we will be in crisis for a year or two [and] people ask: ‘why do not You make these changes, when you had the chance to do this?’”
The government of brown was not in power long enough to ensure that these reforms, but they had to be transferred to the next mode, he said.
Asia will probably become the source of another major crisis global markets, the ex-Chancellor has warned.
The collapse in Asian commercial lending within the shadow banking sector could derail the global economy, Mr. brown said. His views Echo long-standing concerns of major financial bodies like the world Bank and the international monetary Fund.
The effects of the Asian loans bad to turn on the unregulated shadow banking sector, which was considered to be worth about $15 trillion (£11 trillion.) in China and is expanding further into Asia, may be similar to subprime mortgages in the United States during the recent crisis, Mr brown warned. “We will ask ourselves why we need the law [reform],” said brown.
Mr. brown said that it solves some of the problems that led to leaving the UK
Mr brown has already called for much more data exchange between global financial institutions. This will ensure that in a crisis it would be possible to know“ who owes to whom and on what terms.” Better data sharing will also facilitate regulators to act quickly by identifying “early warning signals” in case of crises.
The former Prime Minister rejected suggestions that he acted as John McDonnell, the shadow Chancellor, and the overthrow of capitalism, during his interview of Bi-bi-si on the show, Andrew Marr.
Instead, he was “talking about the governance of globalization” and address some of the “wrongs” that led to the British exit from the EU. He called the referendum result a “political earthquake”.
Negative consequences, and the fears generated by the increasingly integrated world economy can not be considered protectionism and nationalism, Mr. brown said.
Mr. brown also said that funding for the national health service should be strengthened by increasing contributions to the system of National insurance as it was“, in fact, encumbered by a mortgage” tax. “There is no alternative to find more resources” for the NHS.
Tax increases would be tolerated if it was introduced this way because people were willing to “accept” if they saw, and the proceeds will go directly to health care. Mr. brown added that there is a new opportunity to do things that are called “progressive,” such as increasing taxes, because people had “seen the failure of austerity.”