2010 will see slow economic recovery

Steve Pateman, head of UK corporate and commercial banking at Santander, was asked by the Daily Telegraph Business Club for his forecasts for 2010.

He replied that the economic environment would probably be more stable in 2010 than in the last 18 months, but expects the economic recovery to be slow and steady.

The pound will continue to be weak against the euro, he forecast, partly because of the high level of the UK's public sector deficit.

Interest rates, Pateman thinks, will stay low through the year. "It is a difficult balancing act in terms of managing inflation, but it is unlikely they will increase much in 2010 because such a move would kncok confidence in the economy, damage recovery and raise concerns among businesses looking to borrow to invest."

Pateman thinks that now is a good time for businesses to expand, and that banks will be looking to lend, as they wish to help small businesses, but it depends on having a viable business plan and a unique selling point.

However, banks are still reluctant to lend as much as they used to, and businesses are being held back by this. It would serve businesses well to find other capital sources if possible.