The British economy is at risk of a double dip recession and it could take five years to return to “economic normality”, according to Ken Clarke.
In an Observer interview the Justice Secretary said there was a real risk of the UK being pulled into another recession by global events, although the chance of this happening was below 50 per cent.
He said: “What I am worried about is global uncertainties and our being hit by downturns in key markets.”
As Prime Minister David Cameron seeks to strike a more optimistic tone at the party’s conference in Birmingham, Clarke said: “I am not sunnily optimistic about where the Western economy is going.”
He said markets had stabilised but volatility had returned, and with “funny things going on” in the currency market the financial crisis was not over.
Clarke said: “ As the Irish are discovering, we are not out of the bank crisis yet; we are not out of the sovereign debt crises.”
He added that Labour suggestions to cut the deficit more slowly were unrealistic and would “lump us back with the Spanish, the Portuguese and the Greeks”.