Archbishop says OK with irking British PM on economy

LONDON (AFP) - Archbishop of Canterbury Justin Welby accepted in an interview aired on Saturday that he had probably ruffled the British government's feathers with his comments on the bleak state of the economy.

The Church of England's spiritual leader said this week that Britain was in an economic depression and could take a generation to recover.

Archbishop Welby, a former oil executive who was enthroned last month, said 10 Downing Street - Prime Minister David Cameron's office - would probably rather he did not speak out on such issues, but added: "That's life".

"I don't know if it annoyed people in Number 10. They haven't said anything here. I mean they probably would have preferred it not said," he told BBC radio.

"Historically depressions have been recognised as lengthy periods in which the economy did not get back to its previous level of activity before a recession set in. So 1929 to 1932 is the great example. There was a big one towards the end of the 19th century.

"We are still significantly below where we were in 2007 in terms of economic activity, of GDP (gross domestic product), and that's quite a long time of being below.

"I'm not pointing any fingers at anyone in particular and saying it's so-and-so's fault or so-and-so's fault; it's simply a measurable fact coming from the national statistics.

"I don't like ruffling feathers - but sometimes feathers get ruffled. I mean, that's life." Archbishop Welby, 57, also repeated his call for a shift towards regional banking.

The global financial crisis hit Britain's banking industry hard, with banks requiring taxpayer bailouts and politicians and protesters alike blaming them for the economic downturn.

"The appeal of regional banking is first that you have slightly smaller banks," said Archbishop Welby.

"Once you go over about £100 billion of balance sheet, there are no economies of scale.

"Secondly, as a regional bank, inevitably you get a commitment to your local region to making it flourish. If you're a long way away from somewhere you have less emotional commitment to that area.

"The idea that has been suggested recently that will result in sort of crony banking where regions just look after their own in a modern regulated environment, is completely absurd," he said.

Britain has narrowly avoided a triple-dip recession, though it is still operating with a hefty budget deficit, adding to its record debt pile, official figures out this week showed.

The kingdom avoided falling into a third recession since the 2008 global financial crisis after its economy grew by 0.3 per cent in the first quarter.

However, British GDP remains 2.6 per cent below its peak in the first quarter of 2008.