Bank chief has been 'leant on' says Balls
Mervyn King, Governor of the Bank of England, has been "leant on" to support the Government's policy of rapid spending cuts against his own better judgement, the Shadow Chancellor Ed Balls suggested yesterday.
Mr King made a highly publicised speech earlier in the week in which he said that the Government was set on the "right course" and must keep to it.
His remarks contrasted with the view he took 30 years ago when Margaret Thatcher's government was cutting public spending and he signed a letter warning against a course that would lead to high unemployment.
Mr Balls, who has repeatedly warned that cutting spending too fast could plunge the UK into another recession, claimed the nation's leading banker secretly sympathised with the Government's critics.
"I do not think that Mervyn King, in his heart of hearts, really believes that crushing the economy in this way is the right way to get the economy moving," Mr Balls said. "It is not what other countries are doing, it is not what many economists think is the right approach, and it is not working."
Asked by his interviewer, BBC1's Andrew Marr, whether he thought the nation's leading banker had been "leant on" by the Government, Mr Balls said: "I think the Governor is being loyal. I think there will be part of him that is worried about the need to get the deficit down. The fact is he is under huge pressure because the economy is not growing."
Despite Mr Balls's warnings about the dangers of another recession, the Chancellor, George Osborne, insisted yesterday that there was no question of retreating from the Government's planned programme of cuts.