Hester: fast recovery "dangerous"
The chief executive of Royal Bank of Scotland has said that a slow recovery from recession would be far better for the UK in the long term than a rapid bounce.
In an interview with me for the last in the present series of Leading Questions, broadcast on the News Channel this weekend, Stephen Hester says "arguably what we need as an economy is a rather gradual emergence from recession where the economy can complete the rebalancing that has not in any way been completed, where people can save more, borrow less, the balance of payments deficit closes, the government gets its own deficit under control".
He says that the priority for the UK is to reduce the indebtedness of public sector, households and businesses. And that if debt is repaid, inevitably that will lead to less spending and investment and thus lower growth.
It's call for all of us to make short term sacrifices for longer term rewards - which some will regard as somewhat amusing, given that it comes from a banker.
But he says that if we return to our ways of the boom years, where households and businesses spend but do not save, the UK could face a "Japanese style lost decade where the economy is highly unstable, or worst case we actually have another down period, a so-called W-recession."
So Mr Hester described a fast recovery, were it to happen, as "dangerous".
His remarks may well be seen as self serving, because the banks are being accused - even by the Bank of England - of lending less than the economy currently needs.
However, Mr Hester insists that Royal Bank is supplying the credit demanded by viable customers. And he says it is a good thing that the volume of lending to companies is falling, because that shows - he says - that companies with excessive debts are choosing to reduce their borrowings.
Mr Hester's clarion call for debt to be reduced may well be seen as implicit support for the Tories, who have been the most vocal of the parties in their demand for the rise in public sector debt to be stemmed.
However Mr Hester refused to be drawn on which party would, in his view, be best in government at addressing what he sees as the imbalances in the British economy.
He said "as anyone in my job and particularly given the government shareholding in my the bank, I'm going to stay well away from a political judgement."
Mr Hester also admitted that his parents, who are academics, believe that "bankers get paid too much".