A no-deal Brexit would be an economic and social “catastrophe”, a senior banking industry leader has warned.

Stephen Jones said leaving the European Union (EU) without an agreement could lead to a 1930s-style economic depression, with widespread job losses, homeowners unable to afford their mortgages, and mass defaults on loans.

“A no-deal Brexit on 29 March, where we crash out of European Union, is a catastrophe,” the head of the UK Finance trade body told Channel 4 News. “It’s a social catastrophe, it’s an economic catastrophe.”

The devastation caused by a disorderly exit would not just hurt the banks’ bottom lines, but hit ordinary people, he warned.

“I don’t wish to be labelled a doom mongerer… but if our economy contracts by 10 per cent that’s 1930s-style contraction," he said. "That is a massive increase in credit card losses, mortgage losses, vehicle loan losses.

“This is about jobs, this is about people not being able to pay their mortgages, not being able to pay back their loans, and that’s really bad news and it’s an outcome we can avoid.”

Mr Jones, who leads the British banking sector's lobby group, added: “I think there is a real risk of No Deal happening by accident… if the prime minister’s deal is voted down, we are in totally uncharted territory.”

Asked if he backed Mrs May’s deal to prevent a no-deal scenario, Mr Jones would only say he backed a “solution that avoids a no-deal Brexit”.

He added: “It’s not a great deal, there’s an awful lot of money being paid for a political declaration, which quite frankly is not worth the paper it is written on.”

Britain Before Brexit: Greater London Show all 16 1 /16 Britain Before Brexit: Greater London Britain Before Brexit: Greater London West Croydon A police van’s speed and siren bring people to shop windows, keen to watch the drama of the public space, curious to know if a crime has been committed and lining up like townsfolk in a western movie Richard Morgan/The Independent Britain Before Brexit: Greater London Trafalgar Square Morning light illuminates a typical scene outside the National Gallery. Everyone interacts with a phone, held in hands and gazed at, or held in the hands of others and posed for. The figure in the background is on another level, an exception, an anomaly Richard Morgan/The Independent Britain Before Brexit: Greater London East Croydon A dispute about shoplifting outside a store’s entrance, conducted in French, revolving around a gold watch Richard Morgan/The Independent Britain Before Brexit: Greater London Bank The Chinese flag hangs over the centre of British finance, its red blush bringing luck to the morning. St Paul’s Cathedral occupies the blue distance Richard Morgan/The Independent Britain Before Brexit: Greater London Bond Street Three pairs of legs and feet in different states, playing different roles in the heart of British commerce: one clothed, striding purposefully; another of white plastic, made to model and convince; the last barefoot, not standing Richard Morgan/The Independent Britain Before Brexit: Greater London Upton Park Plastic bags dress naked trees, only partially, flaying in the wind, torn and damp, leaving most of the branches exposed, like black cracks spreading across thin ice, across the tower block of civilisation Richard Morgan/The Independent Britain Before Brexit: Greater London Westminster A pro-Brexit protester walks past the Houses of Parliament and the anti-Brexit protesters camped opposite. Both have appropriated the Union Jack, claim to be acting in the national interest and to be patriotic. Caught in between are child and mother, who photographs the ‘home of democracy’, or herself Richard Morgan/The Independent Britain Before Brexit: Greater London Islington A new tube map is put up outside the station, hands reaching high, stretching upwards, as if in worship of the security camera, in awe of surveillance itself, one of London’s most valued currencies Richard Morgan/The Independent Britain Before Brexit: Greater London Tooting Broadway A huge bingo hall hidden away from the high street, populated sparsely by a few players. There’s so much concentration and focus. I can’t decide if they’re there to play, to win, to hide, to escape, or to kill time Richard Morgan/The Independent Britain Before Brexit: Greater London The Mall Horses are tourist attractions in certain parts of London, especially when they’re dressed in military regal attire and carrying a soldier or a guard. Tourists pose alongside them for selfies and generic holiday snaps, which when taken daily in their millions, re-enforce a global image of London as a hub of ceremonial pomp and ritual Richard Morgan/The Independent Britain Before Brexit: Greater London Tooting Bec An anonymous critique of an advert’s imagery, wheeling out the age-old distinction between lust and love, sex and companionship, surface and interior, shallowness and depth, superficial and real Richard Morgan/The Independent Britain Before Brexit: Greater London Wandsworth A declaration of the existence of community is damaged and broken. A sign portraying strength and solidarity looks weak and sad and lonely when it begins to crumble and fall apart Richard Morgan/The Independent Britain Before Brexit: Greater London Buckingham Palace I watch a lineup of paparazzi photographers outside the palace. They wait to pounce upon blacked out windows concealing guests to the Queen’s Christmas lunch. They appear bored and unenthusiastic, as if photography were for them but a chore that flashes light on celebrity faces Richard Morgan/The Independent Britain Before Brexit: Greater London St Paul’s The city is reflected by its values: a relentless list of imperative commands to become something else, some better version, upgraded; a message that says we need to acquire to improve; a hard-hitting reminder of your inadequacy and incompleteness Richard Morgan/The Independent Britain Before Brexit: Greater London Colliers Wood A laundrette on the peripheries, zone 3, where a man sits below another London – Piccadilly Circus – with its giddy movements and interactions, its colours and vibrancy, where life is shaken up and spun, as if in one of the washing machines below, rotating and loud, everything inside blurred Richard Morgan/The Independent Britain Before Brexit: Greater London Uxbridge A building site concealed with an image of what will be. A common way to cover up the messy process of (de)construction. The housing development claims to be affecting time and space, moving people into new places and better futures, fundamentally altering their existence Richard Morgan/The Independent

The political declaration is the second part of the withdrawal agreement which sketches out how Britain and the EU will build their new future relationship after the UK has formally left the 27 nation bloc.

Unlike the rest of the document – which deals with how Britain disentangles itself from the EU and will pay £39bn in the so-called divorce bill – the political declaration is not legally binding nor does it go into significant detail.

London’s position as the centre of the financial world will end after Brexit, Mr Jones also bemoaned, and the Brexit process had “diminished” the capital’s status in the world.

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“London as the European financial centre appears to most us to be – frankly, quietly – over. We’ll do our best to retain what we can, within the context of what’s negotiated, no deal or a deal, but Frankfurt and Paris will become much more important financial centres in a European context.”

The government has been ramping up preparations for a no-deal Brexit in recent weeks.

A Treasury minister was photographed with a briefing note which warned it could cause “no food” and “no Channel tunnel” after leaving a meeting with officials.