New York City Mayor Michael Bloomberg on Sunday warned that a global economic downturn was looming, triggered by the "lunacy" of public debt.
Bloomberg, one of the world's richest people, blamed a crisis of confidence for what he said would be either a brief dip or a nosedive.
Advocating fiscal conservatism, Bloomberg said governments should build up a surplus to fall back on during economic slides.
"Being a fiscal conservative means preparing for the inevitable economic downturns -- and by all indications, we've got one coming," he told the annual conference of Britain's main opposition Conservative Party in Blackpool, northwest England.
The founder of financial news and data giant Bloomberg said administrations had to create the conditions for markets to work and bore a responsibility to pay their own way.
Bloomberg said this month's "debacle" at troubled British bank Northern Rock was merely the latest evidence of turmoil in the financial markets.
He said the crisis was only partially a result of the collapse of the sub-prime mortgage sector in the US.
"The fact is, this is not a mortgage crisis -- it's a crisis in confidence and we're all in it together," he told delegates. "It is being driven by rational expectations of a worsening credit crunch -- which is a self-fulfilling prophecy."
Bloomberg said it was not yet known whether the downturn would be a "dip or a dive," but governments could not stop the business cycle.
He said fiscal conservatism meant balancing budgets rather than running deficits the next generation could not afford -- which would make forthcoming downturns easier to manage by preparing for them.
That depended on improving efficiency, cutting taxes when possible and "when you run a surplus you save it, you don't squander it."
The tycoon blasted some US conservatives, saying: "Too many of them want to run up enormous deficits and hope that some way, somehow -- someone else will pay for it. That's not conservatism -- that's alchemy, or, if you like, lunacy."
The 65-year-old added: "In New York, the economic uncertainty our two countries face today is beginning to feel similar to the economic downturn we experienced six years ago -- but this time, the stakes are higher because more people owe more debt and so do our governments. The sun is rising on our borrowing bacchanalia and pretending otherwise will only make the recovery slower and more painful."
He said his principles of governmental economic management required a four-part approach.
"First, improve the quality of life that residents and visitors experience. Second, stick to fiscally responsible principles. Third, invest in projects that will unleash and incentivize private sector investment -- and that will both leverage and diversify the economy," Bloomberg said.
"And fourth, provide strong leadership that is based on independent problem-solving, not partisan politics, and that is not afraid to tackle the toughest problems," he said.
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