1. The UK Economy : How Long, How Deep? Dennis Turner HSBC Bank plc Presentation for Best Western Hotels GB Celtic Manor, 8 th February 2010

2. FIRST RECESSION FOR 16 YEARS

3. Sustained GDP growth

4. BUT THE WRONG SORT OF GROWTH

5. Consumers the driving force

6. But underpinned by borrowing

7. The public sector has made a comeback

8. But government finances weakened

9. WHERE TO FROM HERE?

10. Consumers under pressure

11. A slower recovery than the last recession Forecast

12. Because record levels of personal debt,

13. a rising tax burden and

14. subdued earnings growth, hit by

15. rising energy and food prices

16. Unemployment also dampens spending

17. An investment-led recovery?

18. Robust corporate profitability

19. Key PMI surveys went south expansion contraction

20. A sluggish investment outlook Forecast

21. GROWTH WEAKENED

22. A deep recession Forecast

23. ALL THE LEVERS ARE BEING PULLED

24. Government finances already in deficit

25. Now deficits set to continue rising 2009 Pre-Budget Report

26. Investment rule no longer sustainable Sustainable Investment Rule

27. Net debt to soar Sustainable Investment Rule 2009 Budget

28. Interest rates fall to historic lows

29. Price pressures eased - RPIX - CPI

30. which created room for interest rate cuts

31. And sterling is sliding

32. Sterling takes a pounding US dollar / £ (L axis) euro / £ (R axis )

33. BUT………

34. Credit supply a drag on activity

35. The funding gap

36. Financial market turmoil is a major risk

37. The nuclear option used

38. An injection of £200bn via QE

39. The medicine is working

40. The slow thaw

41. Lending – a mixed picture Lending to households Lending to businesses Annualized growth in outstanding lending

42. Straws in the wind

43. De-stocking nearly over

44. Key PMI surveys starting to turn expansion contraction

45. Housing market – signs of renewed life rising falling House prices :

46. Recovery underway in 2010

47. A slow recovery is underway Forecast

48. Inflation to jump – but temporarily Forecast Target Range

49. And interest rates start to turn

50. But real interest rates still negative Forecast Positive real interest rates Negative real interest rates

51. Sterling – still opportunities for exporters Sterling weaker US dollar / £ (L axis) euro / £ (R axis) Forecast

52. THE POST-RECESSION AGENDA

53. Where will growth come from?

54. THANK YOU