Milton, who will stand as Conservative candidate for North Devon at the next general election, says the FSA and Bank of England need to address the destabilising effect that he believes short-selling is having on the economy.
He says the FSA should place limits on short-sellers and suggests banning stock lending or forcing those borrowing the shares to stump up 100 per cent cash deposits.
He says: “Never have we faced such a serious threat to financial stability and unless concerted and firm action is taken to allow confidence to form a foundation, the implications for all of us are dire.”
An FSA spokeswoman says the regulator’s only concern in relation to short-selling is disclosure with regard to rights issues. She says: “We have tackled what we think is the issue and have no intention of introducing limits on short-selling.”