The livelihoods of millions in Britain are at risk because of an ‘immensely serious’ threat of a new global financial crisis.

Deputy Prime Minister Nick Clegg said yesterday he was ‘incredibly worried’ that spiralling financial turmoil in Europe and America’s failure to agree on how to tackle its vast debts could drag down the British economy.

And a report from leading economists today warns the UK is at a ‘critical juncture’ because of the threat of contagion from the eurozone debt crisis and a deteriorating international economic outlook.

The economic forecasting group Ernst & Young Item Club warns the economy is likely to grow by 1.4 per cent this year, down from the 1.8 per cent it predicted in April.

It says consumer spending will fall by 0.4 per cent this year while saving is also falling thanks to the intense pressure on family budgets because of rampant inflation.

In a sign of the seriousness of the eurozone debt crisis, the International Monetary Fund warned that Greece was on a ‘knife edge’ because of its over-borrowed economy.

And concern is growing across the world over President Barack Obama’s inability to forge a deal with political opponents over how to deal with U.S. debt.

He was locked in talks with congressional leaders last night aimed at averting the once-inconceivable prospect of an American default.

 


Yesterday, Mr Clegg took the highly unusual step for a British politician of criticising the paralysis in the U.S. and suggesting it could help trigger a global financial calamity.

Figures on the British economy, due in ten days’ time, are expected to show it is still flatlining.

Asked by the BBC how worried he was about the prospect of another world crisis hitting Britain, the Deputy Prime Minister said: ‘I’m incredibly worried.

‘I think the gravity of the uncertainty in the United States, which is basically a product of political gridlock, and the growing fiscal crisis, sovereign debt crisis in the eurozone is immensely, immensely serious.

‘If anyone thinks that somehow we can turn our back on it and sort of wash our hands of it and somehow say “oh well, there by the grace of God go we”, I think [they are] mistaken. This has a direct impact on British jobs, on the livelihoods of millions in this country.’