F&I Management & Training

A slow, smooth recovery from recession would be far better than a rapid bounce, Stephen Hester, chief executive of Royal Bank of Scotland, has said.

He told BBC business editor Robert Peston that "a rather gradual emergence from recession" where the economy could "rebalance" was the best way forward.

He warned a "spend-not-save" culture could mean further economic downturn.

Mr Hester was made RBS boss in November 2008, at the same time as the bank had to be rescued by the government.

A 70% stake is now held in RBS by UK taxpayers.

'Lost decade'

Mr Hester told our correspondent he wanted to see a situation "where people can save more, borrow less, the balance of payments deficit closes, the government gets its own deficit under control".

He said the priority for the UK was to reduce the indebtedness of public sector, households and businesses.

But if we returned to our ways of the boom years, where households and businesses spent but did not save, he warned that the UK could face a "Japanese-style lost decade".

That would be a decade "where the economy is highly unstable, or, worst case, we actually have another down period - a so-called W-recession".

So Mr Hester described a fast recovery, were it to happen, as "dangerous".

Mr Hester also told our correspondent that his parents, who are academics, believe that "bankers get paid too much".

DATED: 12.09.09

FEED: BBC