Labour confession: How Tony Blair admitted responsibility for UK’s economic problems

On Sunday, the Bank of England (BoE) warned that the coronavirus crisis will push the British economy into its deepest recession in 300 years, with output plunging almost 30 percent in the first half of the year. In its monetary policy report, the BoE presented gloomy predictions for the economy, suggesting output would slip by three percent in the first quarter followed by a further 25 percent fall in the second. This would mean an almost 30 percent drop overall in the first half of 2020, the fastest and deepest recession since the “great frost” in 1709.

The economic projections came with a warning to Britain’s banks that if they tried to stem losses by restricting lending, they would make the situation worse.

Andrew Bailey, the BoE governor, told the Financial Times that a failure to lend would create a vicious circle of more bankruptcies and higher losses on loans that would come back to hit the banks themselves.

Speaking to journalists, Mr Bailey said: “The better path for banks is to keep lending . . . we keep banging this message home. If the system [ensures a good supply of loans], we’ll get a better outcome.”

As the crisis is set to deepen, unearthed reports shed light on how the country responded to the 2008/09 financial crisis.

According to a 2012 report by The Telegraph, former Labour Prime Minister Tony Blair admitted that his government was partly responsible for Britain’s economic strife after the credit crunch.

Labour failed to grasp the threat posed by a deeply integrated global economy, the former leader said.

However, Mr Blair, who left office in 2007, warned that a “vibrant” financial sector was essential for the future economic health of the UK.

When asked about his own responsibility for Britain’s economic problems on the Murnaghan programme, on Sky News, Mr Blair said: “Of course, everybody who was in power in the period bears a certain responsibility.

“On the other hand… this global financial crisis was the product of a whole new way that the financial and banking sector has been working in this past 20 or 30 years.

“You have got this deep integration of the global economy and you have a lot of financial instruments that were created whose impact people didn’t properly understand.”

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Mr Johnson urged greater investment in the economy and the encouragement of large capital projects to get the economy moving.

He told the BBC‘s Andrew Marr Show: “I am worried that people are losing confidence and losing enthusiasm.

“We need a more aggressive plan for more infrastructure.

“There in danger of overdoing the gloom. I don’t think that this will go on for another eight years.”

Mr Johnson warned against an “orgy of stable door-banging and excessive regulation” for the financial services sector and claimed there were many international competitors that would be “only too happy to knock London off its perch”.

He added: “My message to Americans who may be slagging off London: the sub-prime crisis, frankly, began in the United States, not here.”