Former Cabinet Secretary Lord O'Donnell hints he could enter race to replace Bank of England Governor Sir Mervyn King

In some of his most upbeat comments since the crisis, Sir Mervyn King claimed “there is momentum behind the recovery that’s coming” and that “good progress” has been made towards a new, sustainable economy in the last few years. “I think that during the course of 2013 we will see the recovery come into sight,” he said. “If you take away what happened in the North Sea oil production and in construction, the UK economy last year grew by 1.5pc.” Overall, the economy grew by 0.2pc in 2012, according to the latest official data, and is expected to grow 1.2pc this year.

Mark Carney, current Bank of Canada governor and surprise pick to replace Mervyn King as incoming governor of the Bank of England, dove straight into the monetarist looney bin today with policy proposals.

In one of his last speeches as governor of the Bank of England before he steps down at the end of June, Sir Mervyn said that retaining a 2pc target was an “essential” part of monetary policy. It followed comments by Mr Carney, the current Bank of Canada governor who takes over at the Bank of England on July 1, suggesting that central bankers could abandon inflation targeting, reports The Telegraph.

OTTAWA — Now that the Bank of Canada has begun the process of finding a new governor, the focus will no doubt be on the central bank’s No.2 policymaker. Tiff Macklem, the senior deputy governor, is seen by many as the front-runner to take over from Mark Carney, whose decision to cut short his stay at the Bank of Canada — and take a parallel, though much tougher, role in England — shocked all but those most close to him.

George Osborne is poised to advertise for a new Bank of England governor in the autumn to replace Sir Mervyn King.