How to recession-proof your finances Which? interviews Norman Lamont

Lord Lamont of Lerwick spoke to Which? from the boardroom of privately owned independent commodity traders Balli Group, of which he is a director. 

Eighteen years may have passed since he was Chancellor of the Exchequer, in John Major's Conservative government, but his interest in and insights into UK economic policy remain as keen as ever. 

Greed and risk to blame

Lord Lamont told us that greed along the bankers and government failure to slow the economy down earlier both exacerbated the recession. 

He revealed although the government started off well, establishing a reputation for prudence 'they then cast this away to the winds.' 

He added: 'All I can say is that as someone who observed it in a puzzled and curious way, is that I was very surprised with how long the government got away with taking so much risk for so long.'   

A long drawn out slump

When asked how long the UK would remain in recession, Lord Lamont said: 'I would guess that at the beginning of next year we will see output stopping to fall, perhaps. I suspect that we'll have a rocky period bumping along the bottom for a long time thereafter. 

'And it will take a long time before unemployment comes down. I would expect unemployment to go on rising through 2010, possibly 2011 and then stabilise. But I think it will take a long time to come down.'

Are recessions inevitable?

Which? asked Norman Lamont whether recessions are inevitable in the modern age. 

He felt that cycles of boom and bust will occur, but added: 'I don't think that, although ups and downs are inevitable in the economy, we should have to put up with a down of this magnitude, because the boom should have been corrected much earlier. And I think that was quite obvious, really.'

The voice of experience

Lord Lamont is well placed to comment on the recession. He was Chancellor of the Exchequer during John Major's Conservative government, running the economy from late 1990 until May 1993. When he took over at the Treasury inflation was running at 10.9%, with the Bank of England base rate nudging 14%. 

Hamstrung by the European Exchange Rate Mechanism - which aligned the pound to the Deutschmark - Lamont took the decision to withdraw from the ERM following Black Wednesday in September 1992, when the economy took a drastic downturn. 

The move was seen by Robin Leigh-Pemberton, then the Governor of the Bank of England, as the right move. But it failed to improve public confidence in the Chancellor and the government. He was sacked as Chancellor on 27 May 2003. 

You can hear an except from the Which? interview with Lord Lamont below.

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