Friday 28 July 2017

WikiLeaks saga: Bank of England chief urged to quit over latest cable releases

Daniel Bentley in London

The governor of the Bank of England was urged to quit last night after it emerged that he had privately criticised David Cameron and George Osborne in the run-up to Britain's general election.

Mervyn King confided to the US Ambassador to London, Louis Susman, in February that he had "great concern" about the then leader of the opposition and shadow chancellor.

Mr Cameron and Mr Osborne, now prime minister and chancellor respectively, lacked experience and tended to view issues merely in terms of their electoral impact, he said.

At pre-election meetings with them, Mr King had pressed the two men for more details about how they planned to reduce the UK's deficit.

He thought the two had failed to grasp the pressures they would face to cut spending, the governor told Mr Susman.

His comments -- which were relayed to US Secretary of State Hillary Clinton -- were revealed in the latest batch of US embassy cables obtained by WikiLeaks.

They are embarrassing for Mr Cameron and Mr Osborne and threaten to damage the government's relations with the bank governor.

A former member of the Bank of England's interest rate-setting monetary policy committee last night accused Mr King of compromising Threadneedle Street's independence.

Clouded

Writing on the 'Guardian' website, Professor David Blanchflower, who stood down from the MPC in May last year and has clashed with Mr King before, said the governor had a "thirst for power and influence" that had "clouded his judgment one too many times".

"He has now committed the unforgivable sin of compromising the independence of the Bank of England," he wrote.

"He is expected to be politically neutral but he has shown himself to be politically biased and as a result is now in an untenable position."

Prof Blanchflower said the cable showed that Mr King had attempted to "co-author the coalition's strategy on the deficit", adding: "That's not part of his job description."

The leaked cable showed how Mr King told the US ambassador that Mr Cameron and Mr Osborne "had a tendency to think about issues only in terms of politics, and how they might affect Tory electorability".

"King expressed great concern about Conservative leaders' lack of experience," Mr Susman said in his classified cable to Ms Clinton.

The governor "opined that party leader David Cameron and shadow chancellor George Osborne have not fully grasped the pressures they will face from different groups when attempting to cut spending", he added.

A Bank of England spokesman said last night: "The governor has a very effective working relationship with both the chancellor and the prime minister."

Mr Cameron's spokesman said the governor was doing a "good job" but refused to respond to questions about whether the prime minister had confidence in Mr King.

"The issue of confidence simply doesn't arise," the spokesman said.

Irish Independent

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