A noted economics professor fears that pessimism is outweighing common sense.

It's hard to keep a level head when everyone around you is losing theirs, which is why Professor Don Harding is choosing his words very carefully.

"I don't think we're in a recession or near a recession yet but it depends what happens in the rest of the world," he says.

Speaking at the height of the recent panic that gripped global financial markets, before the co-ordinated international bail-out of the banking system, Harding was concerned that only the most pessimistic voices were being heard.

"I've never seen anything quite like this. I think our economy is in a better situation [than other developed economies] but I don't know how much better," he says.

Harding is professor of…