Bristol Business School meets leaders of industry
Dr Lyons address focused on the current economic crisis, the economic outlook and the long term factors influencing economic well-being. He began by referring to the period 2007 as being a turning point for the world economy where trends indicate the economic balance shifting from the West to the East. He stated that economic fundamentals such as the balance of payments deficit in the UK and the US went unchecked and that coupled with a slow policy response were contributory factors in the loss of economic confidence. He compared the banking system to the blood circulatory system and saw the injection of capital into the system as vital. Three key factors influenced the degree of leverage in the system – emphasis on risk management and funding gaps [ratio of loans to deposits], lack of liquidity management and the degree of cyclicability [Central Banks keeping interest rates too low]. He contended that the banking system was not regulated enough and compared it to the car industry where regulation is tight but yet the car industry is highly innovative. Dr Lyons contended that the current economic crisis is the worst since the 1970’s. He predicted that the economic outlook is poor, with the UK/USA having a difficult time ahead as the savings rate is low, which, coupled with the declining housing market, declining job opportunity, and lower rates of available credit means that spending capability is likely to be low. He stated that the corporate sector following the 2001 US crisis became fitter and that the consumer sector needs to do something similar now. Dr Lyons referred to the changing world economy and to the pace and scale of change in China and India. However, he cautioned that these countries do not have many of the regulatory tools that we take for granted. He referred to the growing extent of Chinese and Indian involvement in South America and Africa, reiterating the economic balance shift from the West to the East. Finally, Dr Lyons referred to the Government’s big stake in the banking sector and their growing role in the market economy as a key issue in Western countries. |
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The third address in the Autumn Distinguished Address Series was given by Dr Gerard Lyons, Chief Economist and Group Head of Global Research at Standard Chartered Bank plc. 
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Wednesday 24 February 2010 at 09:40:01 AM
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