MP hopes people will pull together to beat credit crunch

Problems in the economy could prompt Britons to pull together, Vince Cable said today.

As the UK heads towards recession, the Liberal Democrat Treasury spokesman said he hoped a positive would come out of the situation.

"One potential upside of (the economic downturn) is that in times of difficulty British people have traditionally rallied round," he told GMTV. "Maybe I am being a bit sentimental but I hope that is something that will come out of this."

The year has seen the economy hit by a series of problems affecting the banking and credit systems, as well as a slump in the property market, a string of high street retailers collapsing into administration and associated job losses.

While the Government and financial sector struggle to reverse the downward trend, official figures released earlier this month confirmed the UK economy is sliding into recession faster than first thought.

Revised data showed a sharper than expected 0.6 per cent fall in output between July and September - the worst since 1990 and bigger than the 0.5 per cent fall first estimated by the Office for National Statistics (ONS).

In addition, several analysts have made predictions of a 2.5 per cent fall in GDP next year - representing the worst annual performance since 1947.

Meanwhile, the FTSE 100 Index's worst ever year will be confirmed later today when the market closes after a disastrous 12 months for UK blue-chips.

The credit crunch, housing market slump and banking crisis have wiped billions of pounds from the value of the Footsie over the past year.

Mr Cable called on the Government to place more control on banks and ensure they start lending to people again "much more sensibly".

He said: "We have been through a very long period in which as a society we have borrowed too much, got too heavily into debt.

"It wasn't necessarily people being stupid, young people needed to buy a house... and house prices got out of control.

"One of the key challenges for the government now is to make sure that the banks behave much more sensibly and responsibly and start lending to people."