The UK economy post-Brexit is likely to suffer the equivalent of a “slow puncture” rather than a “blow out” but recession is on the cards, according to former Liberal Democrats leader Sir Vince Cable.

Speaking at the 2019 Aito Overseas Conference in Wroclaw, Poland, Cable described the UK economy currently as being in a “bizarre Alice in Wonderland world” as a result of growing global debt levels since the 2008 global financial crisis and negative interest rates.

He said: “Assuming there is some kind of Brexit deal, we are almost certainly heading to a weaker currency.

“We are in a very unreal world. I think what we will experience is not a catastrophy, it’s more like a slow puncture – not a blow out. It’s tempting to say Armageddon will be here, but it’s not, a lot of the issues are a slow-burn.”

Another recession is likely, however, he predicted.

He said: “It’s bound to happen, and the government has run out of ammunition. It’s harder and harder to keep interest rates low. What ammunition do we have to fight the next recession? They have used a lot of it up. From an economic point of view it’s the big thing hanging in the background.”

Cable blamed the uncertainty around Brexit for the lack of any investment in the UK.

He estimated the probability of the UK staying in the European Union – in other words of Brexit not happening – at around 25%, leaving the EU without a deal at 25% and leaving with a deal 50%.

One of his major concerns, in a Brexit scenario, is what happens after the end of the transition period at the end of 2020 in terms of regulation in the UK.

Cable cited examples of how current laws concerning aviation, phone roaming charges, employment rights, the environment and data protection could change or be affected by the UK’s departure from the EU.

More from Aito:

Trade warned of rising flight seat costs after Thomas Cook collapse

Industry must engage with government or face quotas

Aito targets 10% rise in number of specialist agents

Association to set up climate change think tank