In an interview with the Guardian, Cable said the public is not ready for the effect on living standards when the spending cuts begin to bite later this year.
Cable added a 20% devaluation of sterling against other major currencies will also hit consumers.
“We have had a very profound crisis which is going to take a long time to dig out of,” he said.
“Britain is no longer one of the world’s price setters and it is difficult to accept Britain was operating a model that failed.
“We had the complete collapse of a model based on consumer spending, a housing bubble, an overweight banking system – three banks each of them with a balance sheet larger than the British economy.
“It was a disaster waiting to happen and it did happen.”
Cable added it will be a long and drawn out process to fix a broken economic model, but expects the coalition government to eradicate the structural deficit by 2015.
