“Cutting into the muscle” of the UK’s public sector with huge budget reductions could cause lasting economic and social damage, a leading banker has warned.
HSBC chief executive Michael Geoghegan urged politicians to not cut too deeply, claiming such a move could create strife, strikes and even riots.
While generally supporting austerity measures, he said: “I caution this - be careful what you do! It is important that the level you cut is not cutting into the muscle of the western world.”
Speaking at HSBC a meeting of bankers, business leaders and members of the HSBC-backed charity Barnardo’s at Belfast City Hall, he called for any cuts to be implemented “on an equal level”, saying any perceived disparity could play havoc with the social fibre of European society.
“The worst thing we could see in Europe would be a Europe that is not at peace with itself, which has internal conflict, disagreement, strikes, loss of work,” he said.
“All those things are as damaging as having a high public cost base. I think (public) cost base can be worked out over time. I think in the long term it is the private sector that has to run society.”
He also urged the Bank of England to change interest rate levels, saying the current policy favoured the “irresponsible” and punished savers.
HSBC made £7bn in profits during the first six months of 2010.