If you’re under 40 years old, you’ve never seen the economy in such a poor state, according to one of the country’s leading economists.

Mark Berrisford-Smith, chief economist of HSBC, believes the credit crunch could get worse before it gets better but will tell a Shropshire audience that he believes the country could escape a recession.

Mr Berrisford-Smith is due to speak to the Shropshire Farmers Club, giving his views on the economic climate and its implications for the farming sector.

Speaking ahead of the meeting on August 7, he said there was a “log-jam” in the world financial system with the wholesale money market effectively drying up as banks have become nervous of lending to one another amid a credit crunch.

He said the other main factor driving the current economic instability was the price of oil, which has reached 140 US dollars a barrel.

“It may not be as bad as some people think,” he said. “Most people want to know if we are going to have a recession, and that’s by no means inevitable. I think we could avoid it by the skin of our teeth.

“But we have had a long period of strong growth, of stable growth and you have to be quite long in the tooth to have lived through anything like this before.

“If you’re under 38 years old, you will never have seen anything as bad as this.

“It was tough back in 2001 but we sailed through that reasonably unscathed.”

Mr Berrisford-Smith added: “The two main factors driving the current situation are probably the wholesale money markets and the oil price. You could get relief from one or both of those over the next few months and then we could look back on it and see the light at the end of the tunnel.

“But if oil is still 140 dollars a barrel and people are still worrying about the banking sector, then it could get worse. If the bank system can be worked out, which could be a question of time, then what happens next could be anyone’s guess.”

Mr Berrisford-Smith urged farmers to be aware of how the markets are working.

“Farmers growing crops are having a good year, especially with wheat and potatoes. But what they are all complaining about is rising costs, particularly the costs of fertiliser and fuel.

“The key message is to know your costs and manage as far as you can.”

The meeting at Shrewsbury Town Football Club is free. Details on (01952) 208200.

By Amy Bould