W e now know that 2009 is going to be very, very tough, particularly the first half of it. A number of our clients are battening down the hatches and there is considerable gloom about.

I was in Washington last week for The Wall Street Journal CEO Council event. At it 95 chief executives were asked when they thought there would be a recovery. Half said in 2010, the other half 2011.

I think it will be sooner, because the market is missing the extent of the fiscal stimulus that the Obama administration is expected to announce. It will be colossal – the number $500 billion has started to appear in the past few days – although, for it to work, people must act together and not independently.

So, my guess is that by mid2009 we will see a very sharp comeback in the financial markets, although it will remain tough in the real world. By 2010 the world will start to pick up.

Of the four “Bric” economies – Brazil, Russia, India and China – India will do best next year. While its growth next year will be down on 2008, China will still grow by between 7-9 per cent. It must, to avoid social unrest. Brazil will grow by between 2-3 per cent, Russia will be under pressure, but the “next 11” countries – including Vietnam, Bangladesh, Mexico and Nigeria – have very reasonable growth prospects. But with the world economy growing by 1 per cent overall, it means that the West will be down – the US, the UK and the eurozone.

At the WSJ event, the speakers included Larry Summers, Henry Paulson and Robert Rubin. To a man, they all said that what the US needed was a sharp fiscal stimulus. Remember, all these people have influence on Barack Obama.

As close to Mr Obama’s inauguration on January 20 as possible, we will see that big package for stimulating the economy announced. It may take the form of a reduction in tax rates, Keynesian infrastructure projects or accelerated capital allowances for research and development.

As well as all that, we will see the US car industry bailed out. But this will happen before the inauguration because there are fears that General Motors will go under before Christmas. Politically, Mr Obama couldn’t have a black woman car worker being put out of work in Detroit while a white debt trader in New York is kept in work.

People also forget that in 2010 the new President faces midterm congressional elections. So he has only one year and nine months before he has to face the voters again – the political need to get a stimulus in place is huge. Think back to Bill Clinton in 1994 and George Bush in 2006. Both were caught out by the midterms, and this will weigh heavily on Mr Obama’s mind.

What concerns me, however, is that, while there will be a massive fiscal stimulus, there have been no commitments from the banks to start lending again.

It was also striking in Washington that, while those three wise men agreed that a stimulus was necessary, they did not focus on how it will be paid for in the longer term. We are mortgaging the future. Everyone in the US is concentrating on how to get through the present crisis – but ignoring the issue of how to pay for it.

By 2010 the West will be living with the long-term consequences of what has happened, and will be overborrowed. India, China and the other Brics will continue to pull away while we are increasingly indebted, having mortgaged our future.

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