Lord Mervyn King, governor of the Bank of England from 2003 to 2013 said the United Kingdom faces an era of much austerity to stabilize the economy, with the average person having to face significantly higher taxes to fund public spending.
Speaking on Sunday with the BBC, Lord King said that it is time to front up with the public about the difficulties the country is facing.
He said public expenditure isn't going down, if anything it will go up therefore taxes will have to rise to fill the gap which is there at present.
That doesn't make a very happy picture for the next few years, said Lord King.
But what we need is a government that will actually tell us honestly there is a reduction in our national standard of living because we've decided to help Ukraine and confront Russia and that means that all of us are going to have to share the burden, we can't just put all of it on our children and grandchildren.
After the 2007-2008 financial crisis, when the banking sector came close to collapse, the new Conservative-Liberal Democrat coalition government announced the sharpest cuts in public spending since the end of World War Two.
Asked if the UK could be facing a similar period of austerity, Lord King, who was governor at the time, said: In some ways it could be more difficult.
He said: The challenge is if we want European levels of welfare payments and public spending, you cannot finance that with American levels of tax rates, so we may need to confront the need to have significantly higher taxes on the average person.
Lord King also reiterated criticism of central banks for failing to curb inflation which is now running at a 40-year high of 10.1%.
He said major central banks, including the Bank of England, had continued to print money to support their economies during Covid lockdowns. This, he said, had contributed to rising inflation.
Meanwhile Guy Hands, a past Tory supporter and a strong critic of Brexit said UK is doomed and on a path to being the sick man of Europe
Mr. Hands, who runs private equity firm Terra Firma anticipated lower benefits and a possible International Monetary Fund bailout and said the Conservative Party needed to admit it has made mistakes.
The reality is when they did Brexit, they had a dream. And the dream was a low-tax, low-benefit economy, Hands told the BBC's Today program.
Outgoing Prime Minister Liz Truss had tried to push through those policies, he said, but it had not worked.
Once you accept that you can't actually do that, then the Brexit that was done is completely hopeless, and will only drive Britain into a disastrous economic state, Mr Hands said.
So I think [if] the Tory party can own up to the mistake they made and how they negotiated Brexit and have somebody leading who actually has the intellectual capability and the authority to renegotiate Brexit, there is a possibility of turning around the economy, but without that the economy is frankly doomed.
However he added that the Conservative Party was, in his view, not fit to run the country.
I think it's got to move on from fighting its own internal wars and actually focus on what needs to be done in economy and admitting some of the mistakes they've made in the last six years which have frankly put this country on a path to be the sick man of Europe,” he said.