THE UK economy is slowly recovering after a soft patch in the first half of the year, a leading economist has told bosses in Kent.

Trevor Williams, chief economist at Lloyds TSB Financial Market, said in Tunbridge Wells that the outlook for the UK economy was more optimistic than the bleak global scenario painted by veteran American economist Paul Volcker in a recent newspaper article.

Mr Volcker wrote in the Washington Post that conditions were as dangerous and intractable as any he could remember.

Mr Williams admitted that UK economic growth had slowed at the beginning of the year, partly due to higher oil prices, rising interest rates and falling house prices.

"However, with lower interest rates, growth in disposable income and rising wealth, consumer spending should recover in late 2005 or early 2006," he said. He forecast a two per cent growth rate in 2006.

Mr Williams was cautiously optimistic about the overall global economic picture. He said: "The world economy is becoming integrated, so long as it remains open, adjustments can take place.

"The real nightmare is protectionism. The future holds real challenges but also huge opportunities for those that get it right."

The event, in The Royal Spa Hotel, was hosted by Lloyds TSB Corporate and chaired by Bill Pike, its Tonbridge-based relationship director.