Banks need to become more 'moral' institutions, says Archbishop of Canterbury Rt Rev Justin Welby as he warns that Britain is in 'some kind of depression'

The Archbishop of Canterbury, the Most Reverend Justin Welby, who has delivered a stark warning that Britain is in an economic depression and could take a generation to recover. (PA)

The Archbishop of Canterbury argued tonight that Britain was suffering not recession but “some kind of depression”.

In comments that will dismay ministers, the Rt Rev Justin Welby called for “very major” reforms to revive the economy.

He told an audience of MPs and peers: “Economic crises are a major problem when they are severe. When they are accompanied by a financial crisis and a breakdown in confidence they become a generational problem.

“Historically, the great failures in banking have led to very long periods of recession at best and I would argue what we are in at the moment is not a recession but some kind of depression and therefore it will take something very major to get us out of it.”

The Archbishop, who is a member of the Parliamentary Banking Commission, was speaking at an event in Westminster organised by the Bible Society. His comments came ahead of figures on Thursday which will show whether Britain has slumped into its first “triple dip” recession.

Stressing he was speaking in a personal capacity, he argued that banks needed to become more “moral” institutions with roots in their local communities.

He said: “The easiest way to do that would be to kill two birds with one stone and recapitalise one of our major banks and break it up into regional banks.”