British banks have lendings of £7bn which is about 5 times the British GDP; and that is far worse than the ratio that precipitated the banking crisis that is devastating the Irish economy.

The risk is that at some time in the next few months or years there will be another British Banking crisis, probably precipitated by the market deciding that British asset values are about to collapse and that the Bank balance sheets are vulnerable to attack – after all nothing has changed since the last banking crisis.  The difference this time round will be that the government will not be able to bail out the banks.

So then it will be up to an EU and IMF to devise a $ and € support package, and they will insist that we do not use competitive devaluations to export our way out of trouble.

Are the banks and government doing enough to avoid this outcome? I really doubt it!