The next financial crisis in the UK will probably shape up like this. The Brexit vote has caused the pound to fall 15% or so. This means that imports cost more. Hence prices are rising. At the moment wages are not rising. However, the drop in immigration, also caused by Brexit, is creating labour shortages and unemployment is now well below the magic 5% figure. Sooner of later wages are going to start pushing up. This means that costs inside the country will be rising in addition to the costs of imports. This will trigger an inflationary spiral. In particular, it is likely to hit food prices for which demand is, as they say, inflexible.

At the moment, as real incomes are squeezed, people are taking advantage of low interest rates and bridging the gap between income and expenditure by getting more and more into debt. When inflation really kicks in the Bank of England will have little choice but to raise interest rates. This will throw a huge number of people into financial difficulties. There will then be a rash of bankruptcies and, consequently, bad debts. Bad debts on that scale have a knock on effect. In this way, Brexit Britain is quite capable of creating a sizeable financial crisis all on its own. If it so happens that there were also a financial crash elsewhere - as happened in 2007 with the US sub-prime scandal - then the UK is very poorly placed to withstand it.

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Following up on this item, I would not be at all surprised if in the next few months - certainly within a year - we see rising interest rates not only in Britain but in most economically "developed" countries, including the USA. This is important because so much of the world's business is conducted in dollars. In recent years there have been the equivalent of negative interest rates - quantitative easing. This means that there has been a lot of loose money sloshing about. This is often the precursor to a crisis. People around the world run up debts when borrowing is cheap. Some borrowed money is used to buy solid assets but much is squandered. However, in due course, interest rates rise and the debt become unsustainable. This is how crisis arrives. I would think, therefore, that there is a fairly high risk of a financial crisis striking somewhere in the world in about twelve to eighteen months from now and it is quite likely that such a crisis in one country will have knock on effects in other countries. I would expect the EU and the US to suffer but not badly. Weaker countries will be more affected. Britain is not only weakening itself, it is also putting itself on the wrong side of the breakwater. If the timing happens to coincide with Brexit it will appear particularly significant.

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