'Look out, we are heading for a crash again', warns William White, the central banker who predicted 2008 crisis

• World faces a crunch that could see a collapse in London property prices
• Despite 2008 crisis being caused by debt, the levels have since risen
• Overall debt has gone from 200% of global GDP in 2007 to 250% now 

The world is facing a new crisis caused by an explosion in debt. So warns William White, the central banker who famously predicted the crisis of 2008.

As financial markets reeled last week and fears of a fresh recession or even banking crisis sparked panic, White was more than willing to issue yet another prophecy of doom.

The world is now facing a crunch that could see a collapse in property prices, including those in London; a new global banking crisis; waves of cheap commodities savaging Western industrial centres; and the need for debts to be written off on a grand scale.

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Predictions: The world is facing a new crisis caused by an explosion in debt. So warns William White, the central banker who famously predicted the crisis of 2008

Rather than being better placed to survive, the world is actually worse off than it was in 2008, he argues.

‘At each stage what’s been happening is the imbalances in the global economy have been getting worse and worse.’

White issued his first warning to central bankers in 2003 at their regular meeting at America’s Jackson Hole. At the time White was economic adviser to the Swiss-based Bank of International Settlements – often dubbed ‘the central bankers’ central bank’.

White now works part-time at the equally prestigious Organisation for Economic Co-operation and Development, but Britain has played a significant role in his life.

Although Canadian-born, he attended the University of Manchester and his first job was as an economist at the Bank of England.

And the 72-year-old has particular warnings for the UK, notably on its property market and the risk to British industries such as steel. But the picture he paints is of a fresh global crisis.

Cheap money has led to an explosion in debt, taken on by governments, households and companies – and despite the 2008 crisis being caused by too much debt, the levels have risen since, he says.

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Pressure: White says China’s overcapacity in steel is deflationary

‘Overall debt has gone from 200 per cent of global GDP in 2007 to 250 per cent now. The deleveraging hasn’t happened,’ he said, by which he means companies, households and governments have not paid back enough debt to be ready for the next crisis.

Britain – and London in particular – could be vulnerable in relation to house prices.

‘Property prices particularly in some bigger places like London, Sydney and Paris would be deemed on the rich side.’

His own son, he says, has just moved from Vancouver in Canada to Victoria because he can no longer afford the property prices.

‘I would consider all of these financial and real assets where they have risen to historically high levels, to be vulnerable.’

At the very least he expects the world to ‘hunker down’.

‘The banks are going to say the whole world has got very risky. They will be biased against lending to anyone who isn’t a number one credit. Consumers are going to say I may have a job today, but maybe not tomorrow and they will focus on repaying debt. Everybody tries to save at the same time,’ he warns.

He worries too about a wave of deflation from China, arguing the world is facing an oversupply of things it does not need.