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Leading bankers sought to win back trust by assuring the CBI’s annual conference they would support companies through what the Bank of England deputy governor warned would be a “bumpy and uneven” recovery.
Bob Diamond, chief executive designate of Barclays, said banks had an “obligation to support businesses like yours to drive economic growth and job creation”.
He and Antonio Horta-Osorió, Santander’s chief executive, were confident the UK could avoid a double-dip recession – a view shared almost unanimously by CBI members on a show of hands. About a third of those at the conference said they expected to create jobs over the coming year.
Nick Buckles, chief executive of G4S, the private security company that employs 40,000 in the UK, said he expected to employ “significantly more staff” in Britain over the next two years in spite of public spending cuts.
But the Bank’s Paul Tucker said the economy faced “reasonably strong headwinds” and was not yet ready to cope with tighter monetary policy.
“Earlier in the year I had expected – half expected perhaps – that by this time in the year the Bank of England would start to withdraw the monetary stimulus we had provided to the economy,” he said. “That seems to me, in terms of my own personal vote, rather less likely now than it was.”
Economists took his remarks as a signal that he was prepared to vote in the monetary policy committee for renewed quantitative easing should the recovery falter further.
Banks came under renewed fire, with David Cameron, prime minister, pledging a shake-up to increase competition and lending and Vince Cable, business secretary, warning against “another self-indulgent” bonus round in the new year.
Faced with CBI members’ criticisms that banks were still not lending enough, Mr Diamond said: “We need to do more in training people in the branches, in terms of credit skills, so the smallest end of businesses feel they are getting served as the most important clients of Barclays.”
On pay and bonuses, Mr Diamond said the bank must “balance our responsibility to manage pay with the need to be both commercial and competitive”.
Mr Horta-Osorió said regulators must “tackle the excesses of the financial system without damaging the system and the competitive advantage of the UK”.