Modest growth expected next year
Mark Berrisford-Smith, head of economics at HSBC Commercial Bank, told Coventry and Warwickshire businesses the British economy should expect up to 2% growth in the coming year.
However, he warned that full economic recovery would be “unlikely” to follow until 2017.
Speaking at the HSBC Economic Update 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.”
Berrisford-Smith added that given the government’s ongoing struggle to make any significant dent in the budget deficit and the unlikelihood of a rise in interest rates by the Bank of England, recovery by 2017 “is about the best that we can hope for”.
He warned that several challenges still lie ahead, with many governments unable to introduce stimulus packages to generate growth in their economies.
But he did have some positive words to depart to his audience of businesses.
He said: “Several significant steps have been taken in recent months to contain the Eurozone’s debt crisis.
“The euro’s survival cannot be guaranteed and exit risk will be with us on a semi-permanent basis.
“But the danger of an imminent implosion has receded.
“The issue now is whether the Eurozone’s stalled recovery can be re-started before the electorates in the peripheral economies run out of patience.”