A hard Brexit could trigger a financial crash worse than the 2008 crisis, Sir Vince Cable has warned.
Inflation, job losses and the falling pound could force the UK back into recession in a “vicious Brexit squeeze”, according to the Liberal Democrat and former Business Secretary, who famously predicted the 2007 financial crisis.
His comments came in a statement announcing his return to politics, as he attempts to wrest back power from the Conservatives in the Twickenham seat he held for 18 years. Sir Vince was in power from 2010 to 2015 in coalition with the Tories, but was dramatically ousted by a swing towards his former partners in the last general election.
A great event on Twickenham Green to mark the official launch of my campaign to win back Twickenham. Thank you to all those who came along pic.twitter.com/0yJa5YMFER— Vince Cable (@vincecable) April 28, 2017
He said: “For Britain, the economic weather is arguably worse than it was before the credit crunch. The pound has plummeted, which is driving up prices and trapping consumers in a vicious Brexit squeeze.
“Consumer confidence was all that kept the storm clouds away. But with job losses at everywhere from Deutsche Bank to Nestlé, that confidence is going to drain away further.
“The chancellor clearly has no confidence in the economic strategy of the Government, because he knows that leaving the single market and customs union has the potential to devastate the UK economy. If Britain enters a second economic storm, it will be Theresa May’s economic storm. You can’t have a hard Brexit and a strong economy.
“That is why it is vital that the general election produces a large increase in MPs who understand why it is essential to remain in the single market and customs union.”
The term “hard Brexit” has been used to describe a withdrawal from the EU which sees the UK leave the single market and the customs union, as well as imposing stricter immigration controls and denouncing the influence of European courts.
As a stop-gap, the UK would likely fall back on pre-existing World Trade Organisation regulations.
Writing for The Independent this week, Sir Vince said: “What will happen when our manufacturing industries and services exporters are cut off from the common standards of the single market, negotiated with difficulty over three decades?
“What will happen to the supply chain industries such as cars and aerospace, whose presence in the UK depends on tariff-free and inspection-free access to the EU through the customs union which the Government wants to leave?”
As well as urging a soft Brexit, Sir Vince predicted a second referendum in his Independent column, reversing the decision to leave the EU should the Government “fail to achieve a satisfactory settlement”.
He said: “I am not a fan of referendums that offer binary choices for complex problems, but since we got to where we are through that route it is now the only way to call a halt, should that prove to be necessary.
“The European Union would itself undoubtedly welcome a rethink of this messy and nasty divorce.”