HSBC’s chief economist Dennis Turner said the economy would be back to normal levels of performance when inflation settles at 2%, GDP growth rises to 2.5% and interest rates rise to 4%.
He said economic predictions were notoriously unreliable, but he felt projections by chancellor George Osborne in the recent comprehensive spending review were robust.
"In the short term, we should have growth of 1.4% this year and 2% next year. This is quite a turnaround from a 5% contraction last year," he said.
"[Growth of] 1.4% is good but not good enough because the trend rate is 2.5% so there is a gap, slowing the wider economy and having effects on profits, margins and costs."
He said the actions of Gordon Brown as chancellor had "turned economics on its head" by borrowing, rather than saving during the Blair boom.
However, he praised the actions of Brown's successor Alistair Darling in his response to the crisis, which he said was "unprecedented. He pulled out all the stops."
Turner said the economy would now be unlikely to return to "normality" until the third quarter of 2012, and said the actions taken by George Osborne since he became chancellor were "astonishingly mature."
He left delegates with some numbers to remember that will give clues to the health of the economy.
"Interest rates we expect to stay low throughout 2011, but then should rise. Slow, gradual growth will be the general drift," he said.
He said economic predictions were notoriously unreliable, but he felt projections by chancellor George Osborne in the recent comprehensive spending review were robust.
"In the short term, we should have growth of 1.4% this year and 2% next year. This is quite a turnaround from a 5% contraction last year," he said.
"[Growth of] 1.4% is good but not good enough because the trend rate is 2.5% so there is a gap, slowing the wider economy and having effects on profits, margins and costs."
He said the actions of Gordon Brown as chancellor had "turned economics on its head" by borrowing, rather than saving during the Blair boom.
However, he praised the actions of Brown's successor Alistair Darling in his response to the crisis, which he said was "unprecedented. He pulled out all the stops."
Turner said the economy would now be unlikely to return to "normality" until the third quarter of 2012, and said the actions taken by George Osborne since he became chancellor were "astonishingly mature."
He left delegates with some numbers to remember that will give clues to the health of the economy.
"Interest rates we expect to stay low throughout 2011, but then should rise. Slow, gradual growth will be the general drift," he said.
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