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Stephanie Flanders
Economics editor
Unhappy anniversary of the credit crunch
It is five years to the day since the world woke up to something bad happening to the balance sheets of the world's largest banks.
That's five years since banks started to worry about lending to each other - and the global financial system started to seize up.
Back then it was difficult for many outside the financial markets to see the potential risks for the global economy. It took the collapse of Lehman's investment bank and a world recession - a year later - to demonstrate that.
But, even pessimists would have hesitated to predict that Britain would still be struggling to put the crisis behind it, in the middle of 2012.
I have a more personal way of dating the crisis: my daughter, Claudia. She was born just weeks before the collapse of Lehman Brothers. Everyone said I had "missed the big story".
Now that baby is starting school next month, and the "big story" is still going strong. Alas.
MediocreWithout the financial crisis, we might have expected Britain's economy to be 10-15% larger now than it was five years ago. Instead it's a bit smaller. And today's forecasts from the Bank of England suggest Britain's recovery will be mediocre, at best, for several more years to come.
"Are we there yet?" Five years into an unexpectedly tough journey, it doesn't seem childish to ask.
The Bank of England's Governor has talked of seven lean years for the economy. By that measure, you might say we were more than half way there.
But that biblical prophesy doesn't take account of the eurozone crisis. Or the hole in Britain's public accounts, which all of the country's main political parties believe we should fix - though Labour quibbles with the pace.
As it happens, the Bank's latest forecasts show the UK economy getting back to its pre-recession peak in roughly two years - in 2014. But it will take a lot longer than that to get back to where we hoped we would now be.
The question the Chancellor will be facing, again and again, over the next few months is whether there's anything he could do to speed things up.
Whoever would have thought, five years ago, that it would be easier to get 22 gold medals, in 2012, than a single bit of economic growth?
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Comment number 310.
luditus10th August 2012 - 23:49
Exports are the only way out. HMG recognise this but have forgotten that success in innovation, design and manufacture cannot be switched on over night. Those that knew how are now retired or dead. The remaining small core of capable exporters will grow, but not fast enough. Therefore pound needs to devalue - more QE on its way.
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Comment number 309.
springheeledjaks10th August 2012 - 23:03
Suggestion. Use the government's historic low interest rate to fund 3 types of project.
1) Gov builds new homes for rent. Residents for over 5 years have the right to buy at replacement value.
2) Spend money on infrastructure especially production/transport/telecoms
3) 4th generation nuclear or Thorium power to significantly cut our energy costs.
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Comment number 308.
John_from_Hendon10th August 2012 - 22:25
There is no such thing as a post-industrial society!
If we do not make things society will collapse. We have to make things and the expression post-industrial society is a pernicious lie told by bankers. This is a fraud on the people by the banks so that they steal even more of the peoples' wealth.
Beware there are paid fraudsters on this blog compounding their treason against the poeple!
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Comment number 307.
Removed10th August 2012 - 21:37
All this user's posts have been removed.Why?
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Comment number 306.
purple10th August 2012 - 21:12
296 St Mungo
Reserve banking is the Tom to your Gerry, the problems are not the economy; they are deficit funding gone bananas because the economy is over valued. Central banking did not do that - it might have prevented it, but did not cause it. Central Banks defend value, our economy infates value and shorts its derived funding. It's called accounting........ you are the 53rd card.
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Comments 5 of 310