Bank of England's King Waiting to See What Cameron Can Do on Budget Issues
Pic credit: Leon Kuhn
Aaaaand, you know, if David Cameron is totally unable to trim Britain's budget at all, I'm sure Mr King will be standing by with ink and a press crank ready to rock and roll.
Bank of England Governor Mervyn King welcomed Prime Minister David Cameron’s plans to cut the U.K.’s budget deficit as the euro region’s fiscal crisis threatens the country’s economic recovery.
“The agreement I have been informed about that was reached between Conservatives and Liberal Democrats is a very strong and powerful agreement,” King said at a press conference in London today after unveiling quarterly forecasts. While the recovery may “gather strength,” risks “have increased somewhat, reflecting in particular heightened market concerns about the prospects for fiscal consolidation in a range of countries.”
King, who was briefed on the new government’s plans today, has spent more than a year urging U.K. politicians to take faster action on the country’s record deficit and said Greece’s fiscal crisis shows what can happen when budgets run out of control. Cameron’s Conservative officials have said they will propose 6 billion pounds ($9 billion) of cuts this fiscal year.
See? Central bankers across the pond are no different from our own (did YOU see an "Endorsed by Zimbabwe Ben!" label on Obama's ads in 2008?) and try to stay out of the political circus. In the case of England's economy, King just couldn't stand there and not say anything.
King said that while he tried to intervene “as little as possible” before the election, it was appropriate to comment on the budget shortfall as it is a “very unusual situation” where the coalition partners had sought his advice.
“We are still halfway through the world’s worst financial crisis ever,” he said. “It is important for the central bank to comment on the measures to deal with the fiscal deficit that will certainly color monetary policy for a long time to come.”
King also said the central bank is still prepared to increase its 200 billion-pound bond-purchase plan if needed. The central bank’s chief economist, Spencer Dale, said the program, which started last year, appears to be working.
"Appears to be working" totally well, dude, I'm sure threats from the head of the central bank to cut debt or else don't signal that the Bank of England is worried or anything.