ADVICE sent out to investors yesterday by the RBS group has caused a furore in markets worldwide.

For, as warnings in the world of high finance go, this was a lulu – “sell everything,” and get ready for another economic collapse like 2008.

The note to clients of the Edinburgh-based bank’s credit team made its way into the media, not surprisingly, and provoked a reaction across the globe, especially as the team compared the current situation to that prior to the financial collapse of 2008.

RBS’s elite group of analysts were blunt: “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.”

Andrew Roberts, the bank’s head of European Economics, Rates and Research, said that “China has set off a major correction and it is going to snowball".”

He added that China “has very high debt levels (as a percentage of GDP) given they are still emerging” and crucially they have accumulated this debt incredibly fast.

RBS has predicted that the price of oil will fall to $16 a barrel, that the stock exchange will fall between 10 and 20 per cent%, and that there will be trouble for the European Central Bank.

Saying clients should prepare for “a cataclysmic year”, Roberts predicted a market collapse in November, and in his latest review, he has not changed his mind at all.

Under a heading “Goldilocks kills the bears"’ he wrote: “I think my ‘severe downside for the world’ call is looking OK so far. The fact that we are going well is very dangerous for every investor in the world.

“Why? We posited a negative outcome in the Year Ahead, risks for which were very high, and massively underpriced, with consensus on its usual ‘goldilocks’’ platform.

“What we are now seeing is those risks now playing out. That is the problem. It is not lost on me when something goes from a forecast, to an actual outcome. The downside is crystallising. Watch out. Sell (mostly) everything.”

Identifying the collapsing Chinese stock market as the eye of the storm, Roberts added: “The world is in trouble. The baton of growth pre-credit crunch was in the western world, and passed to Asia post-credit crunch. "

Yet this had been a debt-fuelled build up, according to the bank guru.

He added: “But this has been a debt-fuelled build up. We have come to the end of the willingness to build up such debt, especially as demand factors start to act against this build-up (e.g. especially demographics).

“I showed in the Year Ahead two facts, either of which would lead a visitor from Mars to conclude, knowing nothing else, that we are in global recession: Negative world trade growth – negative world credit growth.

“This is a terrible cocktail. How consensus suggested a month ago that 2016 would be better than 2015 is a total mystery to me. And there is no one left to take up the baton of growth.”.

Roberts added: “The world is slowing, trade is slowing, credit is slowing, we are in a currency war, global disinflation is turning to global deflation as China finally realises what it needs to do (devalue soon, and sharp) and the US then, against all thisALL THIS countervailing pressure, then stokes the fire by hiking rates.”

Though Many experts across the world disagreed with the RBS forecasts, although there was support for the predictions. American firm JP Morgan Chase issued a similar warning, albeit not so wide-ranging.

The banking group said investors should sell US stocks on any rally, adding: “Our view is that the risk-reward for equities has worsened materially.”