Even in times of relative calm, British politics rarely allows party leaders to bow out on a high. Just a few months ago, it appeared that Sir Vince Cable’s tenure as Liberal Democrat leader would end in a similar whimper.

Yet as he contemplates his party’s mixed fortunes, from the collapse in support after the coalition years to its recent recovery from the brink of the abyss, he is convinced it is now well placed to be part of a broader revival of liberal, mainstream politics that not so very long ago had seemingly gone out of fashion.

“If you go back over the history of the 1920s and 30s, there was a slow death of liberal England,” Cable says, speaking to the Observer before his successor is announced this week. “You could perhaps have the slow rebirth through a series of stages. It probably won’t happen in just one general election. I can see a series of electoral events in which cracks emerge and develop in the existing structures and people get together in a different way.”

Cable is keen that his replacement go much further in plotting a Remain alliance with like-minded parties – suggesting that it could be the catalyst for a major realignment of British politics. And while he is heading to the backbenches, he is ready and willing to help with the heavy lifting that will be needed.

“People might not see me as a good figurehead, but I’m certainly willing to be part of it,” he says.

The Lib Dems have already managed to negotiate an alliance with the Greens and Plaid Cymru in the Brecon and Radnorshire byelection next month to maximise the chances of victory for an unambiguously pro-Remain party. Now Cable is calling on his party to go “quite a long way” further in forging a national alliance. He is also holding out the possibility of working with some Tories and Labour, should it change course.

Lib Dem leadership candidates Jo Swinson and Sir Ed Davey. Photograph: Leon Neal/Getty Images

“I’m genuinely interested in these attempts to get cross-party working, getting people working with us, unite for Remain,” he says. “I think there is a lot more to be done in that space. If I can help on that, I will.

“We can’t work with [Jeremy] Corbyn and his entourage. Not because of Jeremy personally, but the cabal – we couldn’t work with them. But you can envisage circumstances in which the Labour party fundamentally changes and we could work with them. There is a dispiritingly small number of Tories who seem willing to stand up and be counted – we could work with them, and we have form in that area.”

Cable believes it is possible for the Lib Dems to become the largest party at the next election, which he expects to happen in the spring at the latest. He says his successor faces a “major strategic choice” over whether to continue the party’s attempts to rebuild by narrowly targeting seats or to adopt a much more ambitious programme.

“That’s the big choice that the leader and party conference in September will have to make,” he says. “My instincts are that we can’t and shouldn’t abandon the targeting. This idea of working at the grassroots and really building up a local base is absolutely fundamental to our success, to the extent that we’ve had it, and you can’t walk away from that. But there is a potential upside that we’ve got to imagine too.”

The next Lib Dem leader will be revealed this week, with Jo Swinson the favourite to defeat Ed Davey. However, several sources have indicated that votes received so far suggest a 50/50 split between the two candidates, meaning a surprise result is possible.

Cable describes his experience as leader as “mixed”. He has been frustrated by some of the behind-the-scenes battles necessary to safeguard the party, which only months ago was fighting for its future before a major upturn in its electoral fortunes. However, he is happy to have met activists outside the “Westminster bubble”, something he describes as the top perk.

Cable in 2010 with then party leader Nick Clegg. Photograph: Rui Vieira/PA

He regrets being associated with an attempt to oust Nick Clegg as Lib Dem leader at the end of the coalition years (a “painful episode”, he says, though insisting he was not directly involved), and also believes he would have done a “good job” had he been able to run for leader in 2007.

Had it been offered in the immediate aftermath of the referendum, he says he would have voted for a soft Brexit compromise. Now, he fears, there is no chance of such an agreement. The most likely outcome, in his view, is that Boris Johnson will slightly alter Theresa May’s Brexit deal, “the ‘lipstick on a pig’ kind of thing”, and win enough votes.

He is seriously concerned about the looming risk of a recession and how powerless governments and central banks could be should it arrive. Given the plaudits he won for his economic warnings ahead of the great financial crisis of 2007-08, those concerns are worth listening to.

“There are quite a lot of red flashing lights,” he says. “It’s a mug’s game to say there is going to be a recession, but recession risk is certainly pretty high right now. I think we should be worried, very worried.

“What happened in the financial crisis was the economic equivalent of a heart attack. The patient was kept alive by having adrenaline pumped in through little wires. We’re still attached to the life-support system.

“That is what is so odd and also so dangerous about it – governments have used up the conventional monetary policy. Levels of government debt to the economy are still historically very high. So the scope for traditional anti-recession measures has already been significantly used up. There are things lurking in the background.”