Return of bank lending could be detrimental to the economy
13 August 2009
A return to pre recession levels of bank lending could have an adverse effect on Britain''s economy.
That is according to Melissa Kidd, economist at Lombard Street Research, who asserted that an end to the credit crunch would not necessarily mean an end to the recession.
She said: "It is not necessarily a pre-condition to recovery that everybody starts lending soon and actually that would be undesirable because what we don''t want to do is get back to where were before with just a load of excessive lending boosting demand.
"It would be preferable to have a slower-burning recovery based on paying down of debt and solidly built on demand that it is not fuelled by credit."
She also revealed that her hope for the post-recession UK economy is one that is less dependent on debt.
Ms Kidd''s comments follow recent data released by the Confederation of British Industry (CBI) which revealed that 27 per cent of businesses seeking new credit lines in the past three months asserted that availability had improved.
By Christian James
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