Aviva boss warns of danger of falling back into recession

Toby Strauss, chief executive of Aviva UK Life, said another downturn is in the "possible rather than probable range" but revealed that the company is taking precautions in case Britain slips back into recession.

"The economic outlook is uncertain," he added. "Our view is that we are likely to be able to steadily trade our way out of this but there is a possibility that we go into a double dip which could be driven by the broader global economy and other forces."

Mr Strauss said Aviva is optimistic about opportunities in the UK and European markets for life savings as people move from state to private provision.

But he added: "We are also looking carefully at the downside and running stress scenarios for a situation when you do get a double dip to make absolutely sure that we are in good shape to survive that and can batten down the hatches appropriately."

Mr Strauss warned that policymakers will have fewer options at hand if there is another downturn.

"I don't think the government have many tools left in the armoury to do something about it if there is a secondary issue either in the UK or globally that causes a knock-on impact on the UK," he said.

"It is good that the coalition is taking some firm action. We are getting some of the upside in how we are perceived internationally and being able to raise debt finance at reasonable rate but we have not yet hit the actual cuts in expenditure.

"When that hits, I think it is going to be pretty tough and particularly tough in certain parts of the country; the North West and Northern Ireland especially so, but generally the regions will have a difficult time."

Regarding Yorkshire, he said: "It will take some pain but it won't be as bad as some other parts of the country because there has been quite some growth in the services sector which is the key to future prosperity."

Aviva, which employs around 5,000 people at operations in York, Leeds and Sheffield, is due to report results for the first half of the year on August 4.

Mr Strauss said trading has gone well in the period and the company is pleased with its performance since first quarter results topped forecasts in May.

He made the comments in an interview with the Yorkshire Post to mark a year in business since the controversial rebranding of Norwich Union as Aviva.

He acknowledged that the move initially met with caution and concern, with fears about the need to change in the midst of a financial crisis when people want constancy in uncertain times.

But he said the campaign has been "executed fantastically" with seamless changes to systems and market research showing insurance brand recognition hitting the same levels as Norwich Union's within a year.

"It has reinvigorated the view of the business" he added.

"By us stepping forward at a time of uncertainty and others were withdrawing and they weren't advertising, it has given an air of a company that knows where it's going and is not afraid to step up and is out there proudly announcing what it's all about.

"That's had a knock-on effect of what end customers think of us and also advisers rather like it and have got behind it.

"It was and is a catalyst for quite a lot of change within the business."

Aviva spent 10m on its name change campaign featuring A-list stars such as Ringo Starr, Bruce Willis and Elle Macpherson.

INDUSTRY WITH AN EDGE OVER EUROPE

Britain's advanced industry for long-term savings and protection products gives it a competitive edge over Europe and the rest of the world, said Toby Strauss, chief executive of Aviva UK Life.

Mr Strauss said the UK can export its expertise in private provisions to other countries as governments face difficult decisions about how to fund ageing populations.

"People are living longer and medical advances mean more can be spent to keep us all alive for longer.

"That is just unaffordable from the state's point of view anywhere in the world," he said.

"It's an opportunity for Aviva and it's an opportunity for the UK as well."

Mr Strauss added: "We think we can both grow our share in markets we are already in and we can leverage the fact that in the UK we are the only major composite left – being in both general insurance and life pensions – and we think we can take those skills and capabilities and reuse them in other markets in the way that say Tesco has done."