Britain is finally set for a sustained period of growth but the recovery will be modest by historical standards, Charlie Bean, the deputy governor of the Bank of England, has said.

Speaking at a conference in London, Bean said the two big factors holding the economy back – the lack of credit from troubled banks and the crisis in the euro area – were now less of a headwind.

But he warned that the government's austerity programme, weak spending by households with high debts, and the continued nervousness of businesses about the durability of the recovery would ensure the pace of the recovery was modest.

Bean, the Bank deputy governor responsible for monetary policy, said that in August 2010 Threadneedle Street had forecast that the economy would grow by a cumulative 9% by now. Instead, it had managed a "miserable" 2%.

"But there are at last signs that a recovery may be gaining traction. In the UK, output rose by a little more than 1% in the first half of the year", Bean told the Society of Business Economists. "And business surveys point to something closer to 2% for the second half of this year, somewhat faster than the economy's historical average rate of expansion. That is good news."

Bean said that UK banks were now in better financial shape and funding costs had come down sharply in the past year. Meanwhile, the threat of a breakup of the single currency had receded.

"But while some headwinds are abating, others remain. The need to restore the public finances to sustainability means that fiscal consolidation will continue for some years yet. And, for some households, the past accumulation of debt may weigh on spending.

"Finally, even though the cloud of uncertainty may be lifting, businesses are likely to remain cautious about increasing their investment spending until it is clear that the recovery in demand will be sustained. So the pace of the recovery is likely to remain fairly modest by historical standards.

"That will mean that it is likely to be some time before the economic slack that built up during the recession has been brought back into use."

Bean said there was some evidence that businesses and households had "got the message" that the Bank would only tighten policy once the recovery was entrenched. Under the forward guidance announced in August, Threadneedle Street said it would only consider raising interest rates once unemployment had fallen to 7%.