The business group cut its 2013 forecast from 1.2pc to 1pc and from 2.2pc to 1.8pc in 2014, blaming the deteriorating global economy and the prospect of more austerity as the Chancellor responds to the worsening public finances. However, it raised its forecast for this year from a contraction of 0.4pc to a contraction of just 0.1pc. Manufacturers offered Mr Osborne some respite ahead of Wednesday, though, after factory output in November turned out to be better than expected. Activity contracted in the month, but it was the smallest decline since August and less than had been predicted. According to the Markit/CIPS Purchasing Managers" Index, manufacturing activity jumped to 49.1 in November from October's downwardly revised 47.3, beating the consensus of 48. A reading below 50 indicates contraction. The survey found that demand remains weak and new export orders are down. Mr Haldane told BBC Radio 4"s The World at One that banks remained one of the major impediments to the recovery because they need to own up to their bad debts to restore confidence and get credit flowing again. Failure to come clean would mean "the fog will persist," he said. Investors will be much less willing to put their money into the banking system. They will lack confidence in the banking system and will either charge very high rates for lending that money to banks or will just withdraw their money entirely," he said. More could and should be done to get lending moving as a springboard to getting the economy moving. He added that bankers pay had been "ratcheting down" but that there was "still some way to travel." I suspect probably yes. He also admitted that "with 20-20 hindsight" the Bank should have done more to deflate the bubble ahead of recession.