Summit News: Lamont paints picture of hope
LORD Norman Lamont has painted a picture of hope for the future of the UK’s economy on the last day of the Insurance Day Summit 2009 in London.
Addressing the assembled delegates, the former chancellor said London has recovered from recessions in the past and the downturn will reinvent the UK’s economy and leave it stronger in the places where it was broken.
However, he warned it may be a while before any true recovery is made: “A recession which is associated with banking tends to be especially long and deep [and] one that is international tends to be especially long and deep.”
He questioned the strategy of comparing past recessions and downturns with the one the world currently finds itself in.
Lamont called the recession “very dangerous” and “far more serious than any we’ve seen since the [Second World] War”. And he noted it was really two recessions in one — one of asset deflation and problems in the banking industry, and also one of boom and bust.
The former Chancellor warned against the repeated use of “green shoots” — a term he coined during the recession-hit years of the early 1990’s — and its intimation that a recovery was on the way. He suggested the current use of this phrase depended entirely on what one’s definition of a recovery was. He agreed the rate of decline is decelerating, but said that whether this is an indication of a true recovery is hard to tell.
And although Lamont is sceptical of the government spending so much money on helping to prop up businesses, he admitted that such a policy must be doing something. However, he questioned whether this policy was akin to pumping up a tyre with a puncture.
Lamont said unemployment will continue to rise and will affect countries throughout the world that do not have an economic crisis as such, but will be presented with one as a result of a drop in demand for manufactured goods, with China being one such country.
Lamont questioned: “Manufacturing and production will rise again but are we going to see a recovery?”
He referred to reports that levels of debt on credit cards has reduced significantly since the start of the recession. Although he admitted this might not help improve the economy immediately it “is fundamentally the best thing that can happen”.
