More indications from employers’ organisation the CBI the green shoot brigade may have been a little quick off the mark in celebrating the UK’s quick recovery: according to director general Richard Lambert, while the economy may be showing early signs of recovery now, there’s a good chance it’s a false alarm.
In fact, as Lambert rather pleasingly put it, thanks to the government’s much-maligned course of quantitative easing, the economy is ‘undergoing a massive course of steroids’, but it’s unclear what the outcome will be further down the line.
Speaking last night at social and economic forum Poiteia, Lambert said it is likely credit markets are too damaged for a quick recovery – meaning it’s unlikely bank lending will pick up any time soon.
“Enormous interventions by the taxpayer over the past nine months have pulled the banking system well back from the edge of the precipice,” he told the audience. “But credit conditions are still a long way away from anything approaching normality.”
The news is unlikely to surprise business owners – while there are indications bank lending is on the up, hundreds of applications are still being turned down.
Lambert said while the government is working hard to improve unemployment among young people, it needs to put businesses in a position where it can ‘play a constructive part’ in preserving vital labour market flexibility.
“The main responsibility for government is to support the macroeconomic stability that the private sector needs in order to create new jobs and generate national wealth. That in turn requires low and stable inflation, a properly functioning credit market, and credible fiscal policies,” he said.