The worst recession for 60 years?
Maybe. Maybe not.

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A leadership forum was held by EP magazine and sponsored by Vantis was held in London this week. Mark Berrisford-Smith, Senior Economist, HSBC Bank provided a review of the past year and outlined his views on issues impacting recovery.

He made some thought-provoking points.

As most executives have now reached a point where they are preparing for slow recovery, the event high-lighted both the drivers of the recession and their implications for what is shaping up to be a lengthy period of return to trend growth.

The significant headline was that, from a global perspective, the recession was over but the UK was still lagging behind. It would take three years before we returned to 2008 levels of prosperity. It will be a long climb out.

One of the most interesting points Mark made was that we have experienced a severe downturn, which saw the economy fall by a dramatic six percent. This recession has targeted the business community rather than the individual. However, neither this one, nor the 1980's recession, was as bad for the individual as the one of the early 1990's, which saw rising interest rates and was truly threatening. With interest rates so slow in the past year, most people have seen their mortgage repayments be far less and therefore able to save money.

Economic Update - the key points:

Review

• From a global perspective, the recession is over; fiscal stimulus packages have worked, so from the third quarter growth across the board has returned except for one obvious exception, the UK.

The early 80's and 90's – the key difference

• Official statistics show that the UK economy has shrunk by six percent, which is on par with the early eighties.
• But neither recession has been as bad as the early 90's, when people either you lost their house and lost their jobs or kept their jobs but faced a rising tide of debt repayments due to higher interest rates.

Quantitative Easing

• The conundrum now is: what to do with Quantitative Easing? It's possible that the Bank of England thought the funds injected in August were to be the last required, but they have since pumped another £25 billion into the economy in October, taking us to the next review period in February 2010.

What shape will the recession take?

• The shape of a recession will always be a V or a W as growth is never steady; but if you ignore the micro and look at the macro, I would describe this downturn as being L shaped, with a steep down and a long up.

Three factors inhibit recovery:

1. Finance
2. Consumer confidence will take time to recover.
3. Public finances must be put back in order.

We have come to think of ourselves as innovative and entrepreneurial but 40% of our growth has come from government, so we need to find new ways to grow and this needs to be driven by the private sector.

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