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Reforms flop will hit world economy, says ex-PM Brown

The world economy will be hard hit by the next financial crisis because it has failed to adopt much needed reforms, Gordon Brown, the former prime minister and chancellor, has warned.
The entire global financial system was in need of “fundamental reform”, Mr Brown said. Such changes ought to have been put in place as matter of urgency but successive governments had not made them a priority. 
“One of my huge regrets is that we had proposals to reform the global financial system that we were pushing forward,” Mr Brown said. “After we’d got the country out of recession in 2009, we had this big agenda for transforming the international financial system.
“My fear is that we will find ourselves in a crisis a year or two from now [and] people will ask: ‘Why didn’t you make these changes when you had the chance to do so?’”
Mr Brown’s government was not in power long enough to secure these reforms, but they should have been carried forward by the next regime, he said. 
Asia is likely to be the source of the next major crisis to hit world markets, the former chancellor warned.
A collapse in Asian commercial lending within the shadow banking sector could derail the world economy, Mr Brown said. His views echo long-running concerns of major financial bodies such as the World Bank and the International Monetary fund. 
The fallout from Asian loans turning bad in the unregulated shadow banking sector, which is thought to be worth some $15 trillion (?11 trillion) in China and extends further into Asia, could be similar to that of sub-prime mortgages in the US in the last crisis, Mr Brown warned. “We will ask ourselves why did we not act enough [on reform],” Mr Brown said. 
Reforms flop will hit world economy, says ex-PM Brown

Mr Brown said he was addressing some of the grievances that had resulted in Brexit
Mr Brown has previously called for far greater data sharing among global financial institutions. This would ensure that in a crisis it would be possible to know “who owed what to whom and on what terms”. Better data sharing would also make it easier for regulators to act quickly by spotting the “early warning signs” of emergent crises.
The former PM dismissed suggestions that he was advocating, as John McDonnell, the shadow chancellor, has, the overthrow of capitalism, during his interview on the BBC’s The Andrew Marr Show. 
Instead, he was “talking about managing globalisation” and addressing the some of the “grievances” which had led to Brexit. He termed the referendum result a “political earthquake”. 
Negative consequences of, and fears generated by, an increasingly integrated world economy could not be dealt with protectionism or nationalism, Mr Brown said. 
Mr Brown also said that NHS funding should be bolstered by an increase in National Insurance contributions as this was an “essentially hypothecated” tax. There was “no alternative to finding more resources” for the NHS.
Higher taxation would be tolerated if it was introduced in this way because people were prepared to “accept it” if they saw funds raised going directly to the health service. Mr Brown added that there was a new opportunity to do things termed as “progressive” such as raising taxes, because people had “seen the failure of austerity”.  
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