Archbishop tells of fears
on length of UK recovery

The Rt Rev Justin Welby said it would take something “very major” to restore confidence and drag the country out of the mire.

He suggested the Government might need to recapitalise at least one major bank, and urged the creation of regional banks.

The comments – days before key GDP data is expected to show the economy remains stalled – came at a Westminster panel discussion on the financial crisis organised by the Bible Society.

“Historically the great failures in banking have led to very, very long periods of recession at best. I would argue that what we are in at the moment is not a recession but essentially some kind of depression. It therefore takes something very, very major to get us out of it in the same way as it took something very major to get us into it.”

The Archbishop said a key move to rebuild confidence was making sure people could no longer “drift” into senior banking jobs.

The former oil executive, who is serving on the parliamentary commission into banking, argued that the main mistakes made by bankers before the credit crunch had been “unsophisticated”.

He said he had been disappointed to discover during evidence sessions that “bankers are not nearly as bad as one hoped that they would be”.

He said: “What they had done was the slightly unsophisticated error... essentially was to borrow short and lend long – one classic error – and secondly they lent very very large amounts of money to people who could not pay them back.”

The Archbishop joked that he became group treasurer at Enterprise Oil in the 1980s despite being “innumerate”.

“Banking is highly complex in management and thus the first thing that needs to happen to restore confidence is to begin a move, that will take a generation or more to complete, towards professional standards in management,” he said.

“We cannot go on with banking being essentially something that people drift into.”

Comment: Page 12.