Britain is much from resistant to the “contagion” at present threatening to destroy China’s £2.4trillion banking system, Sir John Harvey-Jones has warned.

The former ICI chairman and star of the BBC present Troubleshooter issued his stark warning with Country Garden, the Chinese actual property large, in critical hazard of going bust.

And, in an op-ed for Express.co.uk throughout which he warned of the chance of crippling deflation, he stated there might be no complacency amongst UK financiers - with your complete UK economic system probably within the firing line.

Sir John defined: “Latest figures show Chinese consumer prices falling 0.3 percent in the year to July. Factory prices fell 4.4 percent.

“The impact will not be restricted to China.”

If Chinese corporations couldn't get an honest worth for his or her items and companies at dwelling, they might look to “dump” them in key European and US export markets, Sir John defined.

He continued: “Cheaper food? Cheaper cars? Cheaper everything stamped “Made in China”? What's to not like?

“First, it’s not going to be an orderly retreat.

"The potential collapse of China's largest real estate developer Country Garden has left the world economy on the brink.

“Unless Beijing steps in, contagion may destroy the Chinese shadow banking system.

“It's worth $3trillion [£2.4trillion], which is roughly the size of the UK economy.”

Mike Wilson, chief investment officer at Morgan Stanley, fears the US may follow China into recession, Sir John pointed out.

And he offered a blunt message to Bank of England governor Andrew Bailey, saying: “Despite the looming danger the BoE looks set to carry on fighting yesterday's problems rather than tomorrow's.

“We’ll all pay a high price if it doesn’t wake up and halt the rate hikes now.”

UK stock markets slumped on Tuesday as worries about the Chinese economy weighed heavy and new wage UK data stoked fears over future interest rate rises.

London's FTSE 100 plunged by around 1.7 percent during the day, reaching lows of more than a month as all but a handful stocks on the blue-chip index saw losses.

Miners and finance giants acted as the biggest drag on the index, which closed 117.51 points lower, or 1.57 percent, at 7,389.64.

New official data showed that regular wages in the UK grew at the fastest rate since reliable records began, reaching 7.8 percent in the three months to June, compared to a year earlier.

Even though regular wages, which takes into account the impact of inflation, stagnated, the data could still put pressure on the Bank of England's policymakers who are looking for signs that inflationary pressures are easing.

Edward Moya, senior market analyst for Oanda, said: "Record wage development will maintain the strain on the Bank of England to ship extra tightening.

"The economic system nonetheless has a decent labour market as corporations have to pay their workers extra money.