RBS boss Stephen Hester claimed that bank leaders and politicians stood back and did nothing as Britain went bust. He made the damning statement during a speech in front of the property industry and City minister Lord Myners at the British Property Federation’s annual conference in London.
Hester, the former head of British Land, the UK's second biggest property firm, warned that an early recovery could mean that problems take longer to solve.
He said: “We're in a conventional recession. Recessions do take familiar patterns. From RBS's point of view we are not yet going up but the pace of decline has moderated substantially.
“It's vital we realise it’s not just a banking crisis but one of macro economic imbalances with the banking sector mirroring these. We all saw this coming but none of us did much about it. The imbalances were excess saving in the East and excess borrowing in the West. We all predicted this but forgot and got on with business.
“The economic recovery won't be secure until a significant proportion of those imbalances are corrected.
“The point when banks were toppling over has passed. They can now play their normal role. The banking system does have adequate where-withall to provide for UK borrowing.
“Courtesy of government support we have got the time to allow our customers to restructure themselves in an orderly way. Instead of vast amounts of cheap repossessed property this will be a long term recovery allowing things to be rebalanced.”
Lord Myners, the former director and chairman of Land Securities, said: “The cost of credit and collateral terms required are inevitably going to be more demanding than before the financial crisis. Quite frankly banks were being foolish in some of the terms they were offering.
We've had a seriously big night of drinking and recovery will take a while.”
Also speaking at the conference was former Cabinet minister Michael Portfillo who warned that Britain has been through a phoney recession and that people should brace themselves for things to get worse.
He said: “We need the public finances to be sorted out before we can have economic recovery and sustainable growth. We've been through a phoney recession that's been the result of media comment and a fall in public confidence.
“Purchasing power has remained largely unchanged and in some cases has even gone up. But around the corner are large spending cuts and tax increases.”
