The Bank of England enters the political arena

March 25, 2009

Gordon Brown has not said openly that he plans to turn on the taps again in the budget with another package of spending and tax cuts, but his appeals to world leaders to do just that have led to a widespread feeling that more stimulus is to come.

So Mervyn King’s warning against more spending when debt levels are already so high has predictably been leapt upon by the Conservatives as a powerful message of support for their own position. 

Do you believe the way to beat the recession is to stimulate the economy with more spending, as Brown wants, or with  a more cautious, steady-as-she-goes approach as favoured by the Conservatives?

And should the Bank of England governor be straying so far into political territory?

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The Bank Of England is supposedly independent of the government and is supposed to operate in the interests of maintaing a stable economy.

King allowed himself to be sidelined by politicians when he gave early warning of the dangerously flawed policies of the banks as early as 2003. What people conveniently forget is that his powers to intervene had been removed by Brown’s “tri-partite monitoring” system in 2002 and King was powerless to do anything other than to issue those warnings. He must bitterly regret that he had not written an open letter to Brown on the issue and had it published for all to see in the national newspapers.

If he now sees a comparable danger in the profligate spending of the government his clear duty is to say so and this time he is correct to say it publicly so that Brown cannot pretend that no warning was given.

Brown’s only concern is to buy votes at the next election. King’s only concern is to repair his damaged credibility by refusing to be silenced. i know which of the pair I believe. Reuters should be ashamed of itself for its blatant politicking in trying to discredit King by presenting his warning as being politically motivated.

Posted by Jason | Report as abusive