At the Tax Incentivised Savings Association annual conference in London last week, Turner said the British economy was in a much better position now than in previous recessions due to low inflation, interest rates and unemployment over recent years.
He said: “The question is not whether we are going to have a recession or not but how long and how deep. My view is not very long and not very deep because we are starting from a much healthier position.”
Turner said the Government is right to borrow now in order to make tax cuts and boost growth but also suggested that the Government could print more banknotes to “monetise” national debt rather than issuing bonds.
He said: “If you do pump up money supply for long enough and by enough you will start to affect prices and when it starts working you put the policy into reverse.”
Turner said the banking sector that emerges from the credit crunch will pay more attention to risk than market share.
He said whatever margins banks lose through lower business volumes they will seek to make up in their pricing through higher commission, fees and charges.
He told conference delegates that interbank lending will start to recover as banks who have accepted Government funding will have to borrow from each other in order to meet the conditions attached on mortgage lending returning to 2007 levels.