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28
Interview
POWERLIST 2010
Right
on the
money
Trevor Williams, chief economist at Lloyds TSB,
is very clear about what caused the credit
crunch and the measures that need to be taken to
Watching the economy:
Williams at work
turn it around. Hal Austin listens to his opinions
y any measure, Jamaica-born Trevor Williams is a star pointing to the rise in government bond yields as evidence.
B
performer. As managing director for corporate economic “Recovery takes longer,” he refl ects. “Also, there was so much debt
research at Lloyds TSB, the high street and investment in the system the government had to step in. In fact, government
bank part-owned by the government, he is a Premier debt is also high and they too are in trouble. We will see slow
League player in the ongoing debate about the state of the British growth, but unemployment will continue to rise with more defaults;
economy. bankruptcies have not peaked yet. We will see the beginning of
Exuding enormous confi dence and self-belief, Williams, aged 50, recovery next year [2010].”
sits in a small, glass-walled, offi ce looking out at his high-powered He adds: “I do not think that in the UK GDP per head is going to
team as they monitor the sea of computer screens fl ickering with the reach the levels it reached in the fi rst quarter of last year. It will not
constant stream of fi nancial information on which the bank and its reach that level until after the 2012 Olympics.”
many clients have to make instant decisions. And he launches a blistering attack on the Federal Reserve,
Williams is one of those at the sharp end of the dramatic macro- the central bank of the US, for taking its eyes off the ball while the
economic events shaping the UK banking and fi nancial sectors. But subprime housing crisis was brewing. “The Fed thought they could
he also sees his job in the wider context: “The global crisis came ignore reality,” he snaps. “They did not know what was going on. If
about through a complex mixture of a changing world economy, asset prices rise too quickly it will be simply unsustainable. What
which means that many countries have been impacted. we had was the Asian economies saving too much while the western
“Basically, you had some developing countries building up big economies were spending too much. The solution is fairly simple
surpluses, which they deposited in the global fi nancial system, and lies with the Asian and oil-producing economies, in that they
which was used to drive up the prices of certain commodities. have got to stop saving so much and spend more and the advanced
Regulation was lax. The view was that business knew best, which fed economies have got to save more and spend less.”
in to an old-style bubble. That came to an end when it was realised Williams believes that part of the problem was that during the
that those asset prices could not continue to rise.” boom years everybody was making lots of money so no one paid
Williams believes that what western economies have been any attention to what was taking place. Equally, he also believes the
through over the past two years has been an unprecedented fi nancial crisis should not cover up the fundamental restructuring
economic crisis caused mainly by consumers who built spectacular that is taking place in the global economy, the shift of economic
debt mountains. Despite the huge amounts of money pumped power from the developed economies to four quickly developing
into the developed economies by central banks, led by the US’s countries: Brazil, Russia, India and China, the so-called “Bric” group
Federal Reserve and UK’s Bank of England, Williams believes that – although he thinks Russia is falling slightly behind the others.
the recovery will be long and painful, although the recession may “This crisis should not disguise the fact that over the last
bottom out in the last quarter of 2009. 15 years there has been a shift in economic power towards the
Williams also has strong views about the rebound in the equity emerging markets,” he says. But, he cautions, in spite of its
markets, which some key players do not see as a “dead cat bounce”, spectacular growth, still more than 7 per cent a year, China remains
028-029 Trevor Williams 2.indd 1 07/09/2009 11:09
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