UK financial meltdown warning: Bank of England Governor admits to 'very heightened tension and alertness'

But appearing before the Treasury Select Committee to answer questions this morning, Bailey sought to try and quell fears.

He stressed that although vigilance ought to be practised and stress tests be applied to UK banks, that the situation remains “very different” to the financial crash of 2007-2008.

“My very strong view about the UK banking system is that it is in a strong position both capital and liquidity-wise, it is not showing signs of problems in that respect and we have tested very extensively," he said.

"I don’t think we are at all in the place we were in in 2007-8.

"A very different place, but we have to be very vigilant.

"We are in a period of very heightened tension and alertness and we will go on."

The new wave of collapses happened very quickly and have broadly been blamed on interest rates impacting the value of banks’ assets.

Interest rates are rising around the world in response to high inflation.

Yesterday Bailey asserted that the reason inflation and interest rates have sky-rocketed is early retirement has led to a sharp decline in the workforce.

The drop in the number of people available and willing to work has led to a rise wages, pushing prices up across the economy.

In Jeremy Hunt’s budget earlier this month, the Chancellor made replenishing the workforce a priority, with key sections of the Government's fiscal plan being targeted towards the reintroduction of mothers and pensioners into work.

The Bank of England and the Government have so far failed to get a handle on inflation, which currently sits at 10.4 per cent.

Interest rates have rise 11 times in a row in a bid to curb the ballooning prices.