Former Premier Sir John Swan has warned that Bermuda needs to wake up and realise it faces "severe consequences" from the global recession, including more job losses and falling property values.

The businessman said Bermuda's economy was hugely reliant on American-owned international business and that the severe downturn ravaging the US would inevitably have serious consequences in Bermuda.

In an interview with The Royal Gazette, Sir John said this recession was unlike any he had seen before.

And Island residents needed to start discussing the difficult period ahead, prepare for it and work harder on relations with the international business community, on which the economy is heavily reliant.

"I don't see Bermudians being as concerned as they should be about what is happening," Sir John said.

"We've had it so good for so long that we don't want to talk about it. If you don't talk about it, you're not prepared for it and that's when you really get hurt.

"Bermuda is standing alone much more than we think we stand alone. They say pride comes before the fall. We are so proud we think we don't need anybody else.

"We are a capital-driven society, a country that depends on capital flows, as we have no resources. It's foreign capital brought here by foreign-owned companies. If we lose sight of that fact, we are in trouble."

With the continuing credit squeeze, capital will be in short supply, he added. With the US burdened by not only a federal debt of $10 trillion, but tens of trillions more in credit card debt, mortgages and loans, frozen credit flow will take some time to thaw.

Although Bermuda is a British Overseas Territory, Bermuda's prosperity came from the "good graces of the Americans", Sir John said, adding that the Island should focus on building good relationships not only with US politicians, but also with US-owned international businesses.

"When the US Consul General (Gregory Slayton) gets up and says Bermuda is in a recession, we don't want to know. And the executives of the international companies — we think they are just here to give us money and we don't want to hear their opinions," Sir John said.

"We depend on them for our bread and butter, but we don't want to hear their opinions. It's a cultural thing. We expect them to give us what we want, but not to tell us what they think."

The Bermuda economy — and Bermudians' livelihoods in many lines of business — were heavily reliant on the presence of international business. Huge investment and catastrophe losses this year had already burned up billions of dollars of insurers' capital and Bermuda had to understand that this would have an impact, he said.

The international business sector was chiefly responsible for Bermuda's large balance of payments surplus — the difference between goods and services sold from Bermuda to overseas entities and those purchased from overseas. That surplus enabled Bermudians to enjoy one of the highest incomes per head in the world, he said, despite the Island's lack of natural resources.

Major catastrophes, like Hurricane Andrew in 1992, the 9/11 terrorist attacks in 2001 and hurricanes of 2004 and 2005, resulted in dozens of new reinsurers setting up on the Island, bringing money and jobs with them. But there was already evidence that the influx of capital, talent and jobs was drying up and even changing direction.

"The difficulty now is that we are seeing these companies setting up elsewhere," Sir John said, speaking before Wednesday's news that three international companies planned to move their domicile from Bermuda to Switzerland.

"We've seen Ace going to Switzerland, we've seen Flagstone take their underwriting operations headquarters to Switzerland. We've seen a lot of IT and back-office operations being outsourced elsewhere."

A loss of jobs was already quietly occurring, he added. "This isn't going to happen overnight, it will be by attrition," Sir John said. "It's already happening — just ask the landlords. They are not getting the rents they used to. There are more properties available. Tenants can shop around. It's not only residential properties, it's also commercial properties.

"Property prices are likely to fall and not only will they fall, but we will see vacancies."

Property developer Sir John, whose new office building Seon Place is now under construction at the eastern end of Front Street, added: "Don't think I'm not a committed person. I have a lot invested in Bermuda and I'm not going anywhere. But the consequences of this recession are going to be severe. So don't think I haven't started making provision for survival."

When Bermuda's tourism industry fell into decline during a previous recession in the early 1990s, many foreign workers had left the Island, Sir John recalled.

"We had to send a lot of people home," he recalled. "They were people working in tourism and we can't do the same thing today because now they are people who work in international business and our economy relies on them."