Speaking to Money Marketing, Bolton says it will be another two or three years before borrowers feel the good effects from the UK authorities decision to widen the collateral banks can swap in return for Government bonds.
Bolton says this action should have been taken in September as the situation would not have then impacted as much on business and consumer confidence as it has now done.
He also slammed the Government for only taking action now as a response to negative opinion polls.
“Unfortunately, it is too late for what will be a large proportion of UK borrowers and it’s probably too late to avert recession in the UK.
“Because of the delay in the UK authorities in acting we’re probably going to have a longer and deeper recession than ought to have been the case.
Bolton added: “Ironically, once you decide to act you can get the money markets working fairly well again fairly quickly. However, the first wave has crashed over our economy: the liquidity squeeze. Unfortunately we are now bracing ourselves for the second wave which is about to crash: the credit crunch.”
He points out that life is going to get a lot worse before it gets better. “We are now bracing ourselves for the credit crunch. There is an expectation that arrears and repossessions will go up.”
For the full interview with Bolton see next week’s Money Marketing.