Top economist warns Britain facing new financial crisis due to coronavirus

Lord Mervyn King, the former Bank of England governor who went to school in Wolverhampton, warned the economy may struggle to recover from the pandemic.

Mr King served as the governor during the 2008 financial crash which proved an uncertain time economically for the country.

However, he revealed Britain is facing a completely different economic crisis due to the Covid-19 outbreak.

He told BBC Radio 5 Live: "This isn't just now a health crisis. This is an economic crisis induced by the Government taking the measures it needs to save lives.

"But the idea we can shut down the economy for many months I think is not one that will be tenable in the end.

"I think developing an exit strategy is important."

He continued: "The reason this is more difficult than the financial crisis is that, then, we were dealing with a limited number of banks. And we had to save the banks in order to save the economy.

"Now we are having to deal with millions of individuals both vulnerable to the virus but also businesses of all kinds and shapes and sizes which, if they fail, will make it impossible for our economy to recover smoothly."

It comes after reports that 800,000 small and medium businesses could close in the next few weeks.

It follows research that some firms may not get the cash - promised by the Government through grants - that they need in order to survive over the next four weeks.

Mr King, who went to Wolverhampton Grammar School, believes part of this problem is the decision by some banks to close branches amid the lockdown.

He added: "I was concerned to hear that many bank branches have been shut.

"Just as we think of, obviously health workers and people in supermarkets, as being as essential people to carry on working, it is essential that people in banks on the ground - not in head office - can keep working; in order to talk to their customers - small businesses, self-employed people - to arrange the loans which Government has said at a high level it will provide.

"But which obviously we are having difficulty in delivering them through the middle levels."