Coffee House

Post-Moody’s, King backs Osborne

15 February 2012

"">Moody’s doubts might not be making much difference to the actual economy, but they could
make a good deal of difference to the political battle being waged over it. George Osborne, of course, is citing this as further proof of the need for fiscal consolidation. Ed Balls, meanwhile, is
redoubling his call for a ‘change of course’ — and "">somewhat misleadingly too.

But what does Mervyn King think? Thanks to his comments in a press conference this morning, we don’t have to guess. Here’s how Bloomberg "">reported them earlier:

‘“It’s a reminder that we are facing a very challenging path to reduce the scale of our deficit so that, at some point, the ratio of national debt to gross domestic product
can start to fall back again, which has to be the objective,” King said at a press conference in London today. The government has a “long-term plan” for the budget and
“it’s very important that we keep to that.”’

Which reads like a strong endorsement of Osborne to me. After all, the Chancellor does plan to put debt on that downwards trajectory — whereas Labour, "">so far as we know, don’t.

It’s only the view of one man, of course. But this one man happens to be the Governor of the Bank of England, so his views do have a political impact. And it’s that impact that will set Labour
questioning King’s impartiality once again.

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  • TomTom

    King is NOT a Central Banker he is an Economist. That is the problem. In the old days The Governor represented The City towards The Treasury; now he represents The Treasury towards The City and his deputies are Treasury officials.

  • Pettros

    King is an absolute joke and is as responsible for the mess we are in as Brown, Osborne and all the rest.

  • daniel maris

    How can an endorsement from King mean anything? He didn’t see the crash coming. He’s consistently failed to make accurate predictions. And he’s missed his targets by a mile.

  • Dimoto

    Actually, Moody put the UK on “negative outlook” because of “the increased risk of a European event”.

    Being American they probably don’t realise that we aren’t in the Eurozone.

    Of course, Germany, smack in the path of a “European event”, with large and steadily rising Euro liabilities, escapes any “negative outlook” – they can do no wrong in US eyes.

    Similarly, because the German government (illegally) bunged GM, the German factory will survive whilst the (highly efficient and low-cost) UK factory is at risk.

    Meanwhile, our Business Secretary is away on holiday.

    And Cameron is wittering on about life and death issues like booze prices and car insurance rates for teenagers !!

  • Robert Christopher

    Damian Reece, in the Telegraph, reports that Moody cites the risk of a “reduced political commitment to fiscal consolidation”, a policy aimed at reducing government deficits and debt accumulation, as a threat to our rating and highlights the threat of slower economic growth undermining the Coalition’s plans, especially the threat from Europe. So its a game of two halves: cutting debt and encouraging growth.

    Mervyn ‘the swerve’ King steers the only strait course available, and it is hardly available as it is, while Labour are trying to work out why their insane world view is falling apart; it is because we are into the second half of ‘Boom and Bust’.

  • Heartless Curmudgeon

    King backs Ozzy does he?

    Just like he ‘backed’ the Great Economic Pretender, – or at least said nothing untoward that I know of.

    And Balls, – perhaps one of the most despicable of the current lot, – he who sat nodding his agreement at the banal outpourings of his boss as the Great Economic Pretender babbled at PMQs about ‘investment’ (and, let it be noted, while the H2B and many on HM’s Loyal Oppo benches, instead of creating a fuss, also politely acquiesced).

    Anyway, the most important question here is, ARE MERV’S PENSIONS SAFE AND INFLATION PROOFED? I’m sure many of us worry about that.

  • In2minds

    “But what does Mervyn King think”? Well they do say that
    King has suggested helping savers will bring back the recession. Somebody should tell King that everybody quit saving years ago and they now spend the money on drink. Hence Cameron is anti-booze and keen to do something about this. What a complicated thing good government is!

  • Irascible Old Git

    Apparently, ‘the Bank thinks the pace of growth will pick up to around 3% by the start of 2013 and accelerate to between 3-4% in two years time.’

    Strangely enough, no substantial reason for this ‘acceleration’ was forthcoming. How queer.

  • PayDirt

    Since they have found a way to rub out national debt via “Quantitative Easing”, the temptation will be to spend spend the funny money ’til kingdom come. Where is King Magoo’s Moral Hazard now?

  • Percy

    When is the useless King going to be sacked?

  • Jeremy


    “Is King a greedy banker too or simply a Government lackey?”

    Do I detect a note of sardonic humour in your question? I think that I do. But for the record, King is neither. He is the Governor of the Bank of England, and a jolly fine fellow to boot.

  • Tiberius

    It is not breaching a code of impartiality for the Governor to agree or disagree with the economic path chosen by the government of the day. Anyone knows that King’s job (as is Osborne’s) is all the more difficult because of the antics of the last lot.

    Osborne is on the right path, or at least as right a path as possible, bearing in mind that Brown left him at a starting point equivalent to the mines of Moria.

  • salopian

    King’s between a rock and a hard place. His inflation targets conflict with the need to stimulate GDP. Worse still the original mandate set by the GreatBrownBear did not anticipate the possibility that inflation in the UK could be driven by poor European performance and that potential for growth would be eroded by the EU. Who;d be a banker ?

  • telemachus’

    Is King a greedy banker too or simply a Government lackey?

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