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Mervyn King’s warning to the government

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The unusual foray into politics by Bank of England Governor Mervyn King, in suggesting there should be no more tax cuts or spending rises in next month’s budget, has been widely interpreted by the newspapers as a blow to Gordon Brown but a source of secret satisfaction to the Treasury.

Chancellor Alistair Darling, several say, was not happy with Brown’s reported budget plans to offer voters more jam before they had digested the 25 billion-pound fiscal package in last Autumn’s Pre-Budget report.

King’s message was interpreted as bad news for Brown just as the Prime Minister embarks on a whrlwind tour of the Americas to drum up support for agreement at next week’s G20 meeting on a major international programme of fiscal stimulus.

Most papers support the Governor.

“Mr King was right and timely in his message,” said the Times. “Fiscal profligacy by the government since well before the last election has sharply constrained the ability of UK policy makers to borrow and spend more.”

No time to be boring for BoE’s King

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mervynking.jpgBank of England Governor Mervyn King has made his first public speech since the emergency bank recapitalisation programme and several newspapers commented on the change in demeanour of a man who once said his ambition as a central banker was to be boring.

The dramatic events over the past two months since the collapse of Lehman brothers have forced King into the spotlight — like it or not. Being boring is not an option now.

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