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King backs aggressive spending cuts

16 Sep 10

Governor throws his lot in with Government plans to slash deficit within five years, but admits bank's role in crisis

Bank of England governor Mervyn King has lent his weight – and reputation – to the Coalition Government’s programme of radical public spending cuts, in a historical speech to the Trades Union Congress.

King described current levels of public borrowing as “unsustainable” and said that, while there may be some argument over the speed of the cuts, any Government would need a “clear and credible” plan to reduce the deficit, rather than “vague promises”. He also hinted that a further round of quantitative easing by the bank could offset any economic dip resulting from the planned cuts.

None of this will have been particularly welcome to the audience of trades unionists, many of whom will be directly affected by the cuts King is now openly championing. However, he also held out a partial olive branch, by admitting for the first time that decisions made by the bank were at least partly responsible for the financial crisis. “We let it slip,” he said.

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king | bank of engalnd | deficit


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