Economic recovery will be slow and unpredictable (From Darlington and Stockton Times)

Economic recovery will be slow and unpredictable

12:35pm Friday 22nd January 2010

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A LEADING economist has warned Britain’s return from the brink of economic catastrophe will be slow.

Mark Berrisford-Smith has been with the HSBC bank for 30 years and told the North-East Entrepreneurs’ Forum that it could take three to four years for the economy to emerge fighting fit.

All the good work that created a strong economy between 2005 and 2008 had been wiped out.

He explained just how close the country had been to economic collapse.

“We were staring financial Armageddon in the face,” he said. “In the week of crisis in October 2008, economic activity fell off the proverbial cliff. Make no mistake, we did come close to grief.”

Compared with a year ago, there was a vast improvement, he said.

“The policy makers deserve a few hearty slaps on the back. Getting back from the brink was no mean feat. Now it’s all about recovery.”

Positive signs include house prices rising by an average five per cent over the past six months and the British Retail Consortium indicating Christmas on the High Street was the best for eight years.

Improvement began about six months ago, led by the large economies of China, India, Turkey, Brazil and Indonesia.

For Britain, the important news was that the US was getting back on its feet.

He said: “It is still the biggest economy and easily the biggest trading relationship for us.”

The core economies of Europe, which account for half our trade, are also coming out of recession but “muddling along”.

The recession had lasted for six quarters in the UK compared with three to four quarters in most countries.

Lending by banks would be crucial for recovery. Mr Berrisford-Smith said: “It doesn’t matter in recession, by Mike Bridgen mike.bridgen@dst.co.uk Mark Berrisford-Smith: warning people need cash coming out of recession – that’s when they go bust.”

He warned that, in recovery, Britain was heading into the economic unknown.

“The big issues confronting policy makers now are when do governments start to put the finances back in order? When do you cut spending and how quickly?

“If you do it too quickly, you run the risk of making things worse; if you start now, you could end up having another recession.”

He predicted the Bank of England would not increase interest rates significantly – a four per cent base rate would not return until 2012.

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