Credit crunch 'recovery' by 2010

Date: 24th September 2008

The global credit crisis is set to last until 2010, a leading UK economist has suggested.

With its origins in the US-based subprime crisis, the credit crunch has been adversely affecting individuals' and businesses' finances since mid-2007.

The bankruptcy of Lehman Brothers has done little to suggest that the chaos is subsiding, but one economist predicts that a weakening of oil and food prices will lead the way for financial stability.

Michael Baxter, an economist with financial researchers Defaqto, said: "My … view is that you are going to see oil fall quite rapidly in 2009 and 2010 … at the same time we will see the price of food fall as well, so that suddenly we will see affordability start improving again.

"I think that is where the recovery will come [from]".

The latest Lloyds TSB corporate markets business barometer revealed that 20 per cent of the UK's business start-ups are optimistic about the economy's prospects, while 53 per cent remain sullen.