Financial slowdown ‘to drag on’

The current global financial slowdown could “drag on for some considerable time”, the Bank of England’s new deputy governor has warned.

Charles Bean said the downturn was at least as bad as in the 1970s and that every time the markets began to look better, “another grenade” exploded.

But he said growth should pick up and inflation fall next year, if oil prices and credit markets stabilised.

Mr Bean described the crisis as a “transitory period” that would pass.

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The deputy governor, who was speaking at the annual conference of the world’s top central bankers in Jackson Hole, Wyoming, said those at last year’s event believed the crisis would have been over by Christmas 2007.

• A d v e r t i s e m e n t

But instead, he said, it had carried on for a year and every time the markets looked like they were stabilising, “another grenade” exploded as bouts of fear over sustainability hit financial institutions.

“It looks like it will drag on for some considerable time further yet.”

He described the mood at the conference as one of “considerable caution for the next year”.

“We’ve got our fingers crossed that things will improve. But there is the recognition that there is still a long way to go yet,” he said.

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