A LEADING economist has told local businesses that the British economy should expect growth of up to two per cent next year as the threat of an implosion of the Euro recedes.
However, Mark Berrisford-Smith, head of economics at HSBC Commercial Bank, told 150 guests from the Coventry & Warwickshire business and professional services community that it is unlikely to be until 2017 before the economy is fully recovered. Mr Berrisford-Smith was talking at an HSBC Economic Update event held at the Dunchurch Park Hotel.
He said: “The British economy presents a puzzle for analysts: It has contracted for three successive quarters, yet is creating jobs, while the regular business surveys suggest that it has continued to expand, albeit slowly. There will certainly have been some growth in the third quarter, not least because of the inclusion of all the money spent on buying around 11 million Olympic and Paralympic tickets.
“The question is whether the ‘feel good’ factor will extend beyond that. More important is the speed at which inflation continues to abate, so lessening the long squeeze on households’ spending power. If further nasty shocks can be avoided from the direction of the Eurozone, the British economy should return to modest growth of 1.5-2.0% in 2013.”
He added: “With the Bank of England unlikely to consider raising interest rates before 2014, and the government still struggling to make a meaningful dent in the budget deficit, it is clearly going to be several years before economic and financial conditions return to anything like what would have passed for normal before 2007. Getting there by 2017 is about the best that we can hope for.”
On the issue of the global economy, Mr Berrisford-Smith warned that several challenges still lie ahead, with many governments unable to introduce stimulus packages to generate growth in their economies.