HSBC boss warns of a SECOND global economic downturn

By
Sam Fleming
Last updated at 9:12 AM on 06th October 2009

The head of Britain’s biggest bank has warned we could soon be heading into a second recession.
Michael Geoghegan of HSBC said he had delayed expansion plans because he fears the upturn could be short lived.

The chief executive said the economy could follow a W-shaped
trajectory, with the rebound going into reverse and growth retreating
into the red.
The HSBC headquarters at Canary Wharf. The bank has shelved expansion plans amid fears the global economic recession is not over
‘Is this a V recovery or a W?’ he said in an interview
with the Financial Times. ‘It’s the latter.’ Mr Geoghegan’s words carry weight because of the global reach
of his bank and its track record on identifying economic turning
points.
In February 2007, HSBC was one of the first financial giants
to warn of the impact of the sub-prime crisis in the U.S., when it
wrote off 6.5billion. The intervention will fuel the debate between
Labour and the Conservatives over when to slash public spending and
hike taxes.
David Cameron has vowed to take early action to rein in
mounting deficits, warning they represent a ‘clear and present danger’
to the economy.
However Gordon Brown and Alistair Darling claim the Tories’ plans could worsen job losses and derail recovery.

Warning: HSBC chief executive Michael GeogheganMr Geoghegan’s words come after the International Monetary Fund
warned Britain faces a ‘jobless recovery’ because of the tattered state
of its financial sector.
‘The financial crisis has hit the banking sector particularly
hard in the United Kingdom, which typically is associated with a slow
recovery,’ it said.
Unemployment already stands at 7.9 per cent - with 2.5million
people out of work. The IMF said the longer-term outlook for Britain
may be bleaker than in other parts of Europe, because of the
disappearance of ‘exaggerated profits’ in the crippled financial
sector.
HSBC’s equally bleak outlook is particularly disappointing given recent signs of a tentative recovery in Britain.

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