Peter Edwards: Don't just blame the bankers, we all have vital lessons to learn

If that's your view, then I've got some bad news for you. The slump is far from over, with the measly 0.1 per cent increase in output being the weakest progress Britain could have made. And when it comes to sharing out the blame, then we all have to stand in the dock.

The whole of society is implicated. From politicians to bankers and households across the country. The question now, of course, is have we learned our lesson?

Thankfully, it would appear so. Indeed, in some areas, we may have gone too far. Nowhere is this more apparent than in society's treatment of the banks, where Sir Fred Goodwin was chased out of, first, the Royal Bank of Scotland boardroom, then his Edinburgh home, and finally out of this country – and returned only to be shouted at by John McFall MP and his Treasury Select Committee.

Of course, the banks deserve a lot of opprobrium. Their mix of hubris, botched investments and a Micawber-like hope that something would turn up to rescue the value of their failing funds has made life much harder for us all.

What they cannot be blamed for entirely is the simple inevitability of a recession. There will be many more such economic slumps, although with the banking system looking more like being reformed after Barack Obama declared war on America's financiers, the next slump is likely to have its roots in another industry.

Just like dustmen's strikes and big hair on pop stars, the idea of the recession never died with the 1970s – it simply went into abeyance before returning to embarrass those who had celebrated its demise.

So now the recession has ended officially – although the UK was the last G7 nation to return to growth, and even that could be cancelled out if the Office for National Statistics revises its statistics for October to December – politicians and the rest of society need to take a look at themselves.

First, the bankers. While a recession would have happened anyway, in some smaller form, without their failures, they made it a hell of a lot worse.

Much of the debate over how to deal with "the banks" – always described collectively, much like a group of young delinquents – has focused on whether the UK should have a version of America's Glass Steagall, the act which separated depositors' banks from the casino-style merchant banks of Wall Street, and was repealed by Bill Clinton in 1999.

Let's be clear: it should. President Clinton's decision to overturn a law created in the aftermath of the Wall Street Crash of 1929, helped sow the seeds for the most recent financial crisis, hitting countries around the world. That is why we need something approaching it today, both in America and the UK, because the taxpayer risks being hit again and again by the reckless behaviour of banks.

President Obama has realised this, aligning himself with Main Street in order to take on Wall Street. Bruised by his battle over healthcare reforms, however, and with the Democrats having lost their filibuster-proof 60-seat majority in the Senate, the President faces another long-drawn out struggle to get through the reforms which would finally "clean-up" America's banks.

In Britain, the warm response of George Osborne, the Shadow Chancellor, and to a lesser extent, Lord Myners, the City Minister, make new legislation a likelihood.

It is much needed but, sadly, it is not likely to be on the statute book any time soon.

With the first British bailout, of Northern Rock in autumn 2007, creating an implicit Government guarantee that no big bank could be allowed to fail, it is vital financial institutions face restrictions in the way they source the cash they need for complex and speculative investments. New laws here should not go as far as the original Glass Steagall act, however, because aggressive State interference can be just as damaging as the unfettered operation of the free market.

So what else have we learnt? Unless the UK reaches a miraculous and unprecedented rate of growth, Government spending has to fall over the course of several decades. While Labour was right to invest in public services, particularly in the NHS, which has been transformed since 1997, the total size of the public sector is far too large.

The Hull City Council Olympics manager, who last year had a budget of zero but was paid 49,000, and the infamous real nappy co-ordinators, are only two of the more bizarre examples of the State's desire to do too much and simply ending up spending too much.

While some in the Labour Party shrink from the involvement of market solutions in public services, it can sometimes – but only sometimes – be the best way to ensure money is used carefully. More of this is inevitable, whoever is in power in 20 or 30 years' time, and will certainly happen should the Conservatives get over the finishing line first at the next General Election.

Our behaviour as individuals has to change as well. Britons borrowed too much. While banks justified their acquisitions in the name of expansion – with RBS's doomed purchase of part of ABN Amro for 10bn, driven by Sir Fred Goodwin, now seen as the world's worst deal – we spent heavily because we liked it.

If you had some nice clothes, you wanted some more. If you had a house, you wanted a larger one. Of course, that was fine if you had the money. But if you had to borrow heavily, then you were storing up problems for

the future.

Those problems crashed into our world in 2008 and, despite the official end of the recession in Britain, they are not going to go away. With the banking bailout, quantitative easing, which is effectively printing money, and the slashing of interest rates to nearly zero, we ripped up the textbook and still only managed to nurse the country back to an anaemic recovery. That doesn't mean those policies were wrong; it just shows how far we have got to go.

A double-dip recession in 2010 is a real possibility.

In the long-term, however, we have to learn from our mistakes. For all the talk of trading derivatives, credit default swaps and sub-prime mortgages, perhaps the best lesson of the credit crisis is also the simplest: that blowing a financial bubble only ever ends one way – with a loud pop!