Sir Mervyn King: more right than most, but still badly wrong

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.

It is as silly to think of monetary policy as the cure for our economic cancer as it is to believe it the cause, says Jeremy Warner

“Whichever crisis we are talking about it is far from over,” Sir Mervyn told an event at the London School of Economics on Monday. “There will surely be many unexpected twists and turns before we can truly say that the crisis is indeed over.” The Governor, who steps down at the end of June, was joined by several economic heavyweights, including his American counterpart, Ben Bernanke.

In a call to arms, Sir Mervyn King said “there are limits to what can be achieved via general monetary stimulus” as he urged the Government to “find ways of boosting overseas demand for our products” and push through “supply reforms” – often associated with tax cuts and deregulation, reports The Telegraph.

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.