Sustained recovery 'will take until 2017'
THE economy will return to stronger growth next year but it will be 2017 before it is back to pre-credit crunch health, a leading economist has told Plymouth businesses.
Mark Berrisford-Smith, head of economics for HSBC's UK Commercial Bank, told about 70 delegates that whilst consumer and business confidence is improving, 2012 is still set to be a slow year, with growth stuck at about 0.5 per cent.
Next year is forecast to see a return to stronger, "better balanced", growth, he said, although he warned it was likely to be 2017 – 10 years on from the start of the credit crunch – before the UK will be fully recovered.
And Mr Berrisford-Smith also warned that the situation in Greece also poses a threat to the European economy.
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Addressing an Economic Update event, organised by HSBC's South Devon commercial team at law firm Foot Anstey's Salt Quay House in Sutton Harbour, Mr Berrisford-Smith said: "In the past few months there has been a tangible improvement in the mood of both consumers and businesses in the UK.
"Irrespective of what the official growth estimates may say, business surveys suggest strongly that a modest revival is under way in the private sector.
"But 2012 will be a tough year, with the economy only likely to grow by about 0.5 per cent, and with the trend being somewhat lumpy and bumpy on account of the disruption to North Sea gas supplies, the extra Jubilee holiday, the Olympic Games and the continued threat of a Greek exit from the Euro."
He added: "All being well, 2013 should see a return to stronger growth, of around two per cent.
"Moreover, it is likely to be better balanced growth than the UK has been accustomed to during the past 15 years."
Mr Berrisford-Smith said a sustained economic recovery would require a greater contribution from exports and fixed investment, especially as the Government has taken a step back from being an engine of growth.
"If the Eurozone's debt crisis can be kept under control through this very difficult period and there are no major domestic mishaps, firms will eventually opt to proceed with expansion plans as they replace kit that is beginning to show its age and seek to remain competitive," he said.
Stephen Hancock, HSBC area commercial director for South Devon and Cornwall, closed the event. He said: "It was clear from Mark's presentation that there are still potential challenges ahead, but a more encouraging economic picture is emerging, even if it will take time to fully recover.
"Export growth is key for the health of the economy and we are keen to help businesses achieve their international ambitions."