Clegg: Financial crisis may be an economic 9/11

10.55.00am BST (GMT +0100) Mon 13th Oct 2008

Liberal Democrat Leader, Nick Clegg has warned that the financial crisis could become an “economic 9/11”.

During a speech to the IPPR think-tank at Canary Wharf, Mr Clegg said that the consequences of the banking crisis could breed conflict and instability and push democracies into narrow nationalism.

He said: “In our world, economic strength is power. We do not yet know, when the dust settles from this crisis, where the power will lie. The financial collapse we are caught in may prove to be an economic 9/11.

“9/11 was a security crisis, with security implications. This is an economic crisis, but its economic and social security implications are potentially no less profound.”

Mr Clegg also welcomed the Government’s £37bn bail-out plan, and called for a “sea change” in the financial services industry bonus culture.

He also demanded that European leaders “step up to the plate”.

He added: “This crisis has proved that in our globalised world chains of cause and effect have no regard for territorial integrity.

“European governments have a responsibility to reduce inequality in their own countries and to work together to reduce it across Europe as a whole. Extremists target vulnerable and marginalised groups. They will only find sympathy for their cause if disaffected groups feel that economic injustice has pushed them right to the edge.

“It is up to European leaders to emulate the courage and cooperation that fixed the global economy the last time it lay in tatters. This time they must embrace the new powers of China, India and Brazil, rather than sustaining the post war settlement of over 50 years ago.”