Ex-Chancellor Darling raises alarm over consumer debt bubble

Former chancellor Lord Darling today said “alarm bells” should be ringing over a consumer debt bubble as he recalled the “shocking” nadir of the financial crisis a decade ago.

The Labour peer told the BBC that Britain’s dependence on consumer spending should put the country on high alert amid rising levels of consumer spending.

Today marks a decade since the widely acknowledged start of the financial crisis in the wake French bank BNP Paribas’s decision to shut down several funds amid problems in the US securities market.

Darling also recalled the events running up to the state bailout of RBS: “I had to go to one of these meetings of European finance ministers, and I was asked to come out and take a call from the then chairman of RBS [Tom McKillop], who said the bank was haemorrhaging money. Remember this was not only the biggest in the world, it was about the same size as the entire UK economy.

“I said to him, ‘How long can you last?’ And what he said to me shook me to the core. He said, ‘Well we’re going to run out of money in the early afternoon’.”

Former Lloyds chairman Sir Win Bischoff said he believes the system is safer than before “but ask me again in 10 years’ time”.

TSB boss Paul Pester said banks lost their focus on serving local communities in the run-up to the credit crunch.