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.


Without 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?