The financial crisis isn’t over, says King
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The UK is only part of the way through the financial crisis but governor Mervyn King ’very pleased’ with Cameron Government.
In the Bank’s latest Inflation Report, King says inflation will remain above the 2 per cent level through 2010 but will fall as recovery speeds up into 2011.
But King warns that the financial crisis is only “part of the way through” and the sovereign debt crisis in Europe as well as the new coalition Government’s plans for spending cuts may hinder the UK economy.
He says: “The recovery is likely to gather pace over the next year, underpinned by the considerable stimulus stemming from the highly accommodative monetary stance, together with a projected further expansion of world demand and the past depreciation of sterling.
“But the pace of that recovery will be dampened by the fiscal consolidation and the need for UK banks to continue to repair their balance sheets.”
According to Bloomberg, King told journalists he was “very pleased” about the creation of the new Cameron Government and its plans for swift fiscal cuts. He says: “The agreement I have been informed about that was reached between Conservatives and Liberal Democrats is a very strong and powerful agreement.”
This comes as the National Institute of Social and Economic Research says UK GDP rose by 0.5 per cent between February and April 2010, 0.3 per cent higher than the official figures from the Office of National Statistics.
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