EVERY Briton is £20,000 worse off as a result of the 2007 financial crisis, the Bank of England governor reveals today.

Mark Carney told The Sun: “2.5million people across the UK lost their jobs, some lost their homes and most saw their pay flatline.” But he insisted safeguards were now in place to prevent a repeat.

7 The Northern Rock financial crisis saw Brits scrambling to withdraw their money Credit: Getty Images - Getty

Tomorrow sees the tenth anniversary of the Northern Rock crisis, when the stricken bank had to be nationalised after panicked customers withdrew a billion quid in a matter of days.

The credit crunch that triggered its failure led to full-blown financial meltdown. House prices fell, wages stagnated and the cost of living went up. British households are still feeling the pinch.

Mark Carney, Governor of the Bank of England, acknowledges this. He told The Sun exclusively: “The financial crisis was not just something that happened in banking.

“Governments had to use your money to save banks from failure.

“When the global financial crisis hit, it spread panic through a banking system built on weak foundations and it left everyone in Britain an average of £20,000 worse off.”

So could the financial crisis happen again?

7 Mark Carney insists legal safeguards are in place so history does not repeat itself Credit: AFP

Carney explained: “By fixing the faults that caused the crisis, the financial system is now safer, simpler and fairer.

“It’s safer because it has ten times more capital — money put up by investors — to withstand losses. It’s simpler because the complex web that caused panic to spread in 2007 has been untangled. It’s fairer because investors, not taxpayers, will foot the bill if a bank fails.

“We must also look ahead to spot the next big risks.”

The BoE’s Financial Policy Committee (FPC), which looks at what could go wrong, has spotted signs that some risky practices — one cause of the credit crunch — are making a comeback.

Consumer credit growth, driven by cheap car deals, is surging way above levels regarded as comfortable. In July, it grew by 9.8 per cent, far ahead of the rise in household income.

7 Northern Rock customers withdrew nearly a billion quid over a couple days Credit: Getty - Contributor

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So however much you are tempted by cheap credit, Sun readers should go into ALL finance deals with eyes open.

Make sure you can afford any payments if your circumstances change — just because they will lend you a huge sum, doesn’t mean it is right for you.

PCP car deals are of particular concern as our recent investigation showed. Even unemployed people were being offered expensive cars for seemingly a small amount each month. A flash car on your drive is of no use if you can’t afford any household bills because of it.

The FPC is also starting to see more evidence of mortgage lending where homebuyers borrow a high multiple of their salaries. This becomes a concern when it hits 4.5 times the borrowers’ incomes or more.

7 The Bank of England governor says 'everyone in Britain an average of £20,000 worse off' Credit: Getty Images - Getty

BoE rules stipulate that 15 per cent of the mortgage market can be made up of such loans, but alarm bells have started ringing because a couple of banks are pushing up against this ceiling.

Too many home loans of this type could have dire consequences for the wider economy: High levels of household debt curtail spending and make for deeper recessions.

So what can the BoE do to prevent matters from spiralling out of control?

In its beefed-up arsenal are stress tests, used to measure banks’ ability to cope with the worst economic shocks.

7 Bank of England now test banks’ ability to cope with the worst kinds of economic shocks Credit: Getty Images - Getty

Because of the recent recklessness in car finance lending, the latest bank stress tests have been brought forward by two months. Last year’s tests showed British banks could withstand losses of £44billion.

Ten years ago, losses of that size would have wiped them out. The difference now is that since the crisis UK banks have been forced to build up those shock-absorbing “capital buffers”, of £130billion. With these extra safeguards, and the FPC’s vigilance, the BoE believes that the financial crisis that felled Northern Rock, and later the Royal Bank of Scotland, could not happen in the same way again.

As Carney says: “The Bank’s FPC looks at what could go wrong and works with others to reduce these risks and their impact. This helps maintain a financial system that serves households and business at all times.”

Others are less sure that history will not repeat itself.

7 Northern Rock was the fifth-largest mortgage provider in the UK Credit: Rex Features

Family squeeze tightens THE squeeze on family incomes has tightened again with inflation rising to 2.9 per cent last month. Economists were expecting the Consumer Price Index to jump to 2.8 per cent. But the Office for National Statistics revealed August’s figures were even worse. It was up from 2.6 per cent in July. Mike Prestwood, ONS head of inflation, said: “Clothing prices rising faster than last year, along with a hike in the cost of petrol, helped nudge inflation upwards.” The Pound soared yesterday as the figures prompted talk of an interest rate rise by the end of 2017. CPI is forecast to hit three per cent again in October, far above the Bank of England’s target of two per cent. Governor Mark Carney, pictured, warned last month the pressure on families would continue. Households have seen their spending power fall as wage growth falls below inflation.

A study from the respected Adam Smith Institute yesterday claimed that stress tests are useless and that “the biggest risk facing the UK banking system now is the Bank of England’s own complacency”.

Sir Paul Tucker was Deputy Governor of the Bank of England when Northern Rock failed and he said recently that the banking culture is still prone to the excess which caused the credit crunch.

He is also concerned by calls to roll back regulation, particularly in the US. City analyst Russ Mould of AJ Bell says the UK’s new regulatory framework is good but not bulletproof.

He explains: “The money you deposit at the bank is turned into loans many times the size of that initial sum, so if everyone wants their money back at once there isn’t enough to go round.”

7 British families are still feeling the pinch from the Northern Rock catastrophe Credit: Getty - Pool

Chris Wiscarson, chief executive of Equitable Life, the insurance company that suffered its own near-collapse, warns the next crisis could take on a different form from the previous one.

He says: “What if the next crisis is payment systems breaking down, or customer data records being corrupted on a massive scale? Customers who can’t pay their bills, or small businesses who can’t get what’s owed to them, will not sit back comfortably thinking that banks are well capitalised.”

Bigger tests of the new finance regime likely lie ahead, whatever they may be. In 2007, regulatory oversight failed when it mattered most.

This time around, the BoE under Carney is determined to stay in the driving seat.