LONDON (Reuters) - Bank of England Governor Mervyn King gave his trademark downbeat assessment of the British and world economy on Thursday in his first live television interview after nearly 10 years in office, and warned the euro zone could yet fall apart.
Four years after the start of the financial crisis, King said it would be a long while before the economy returned to normal - and the most important task for Britain was now to reform bank regulation to reduce the chances of a future crisis.
"We're beginning to see a few signs now of a slow recovery, but it will be a slow recovery. After a banking crisis one can't expect to get back to normal and I fear it will take a long time," he told Channel 4 News.
Given this situation, it might now be "acceptable" for the government to miss a key debt-cutting goal, he added.
The economy entered its second recession since the crisis late last year, and although King and most private sector economists expect it to grow during the current quarter, King said prospects beyond that hinged on overseas factors.
"What it will depend on critically, I think, is what happens in the euro area and also the rest of the world," he said.
"(Policymakers) have persisted with trying to keep all the countries in the euro zone ... and tried very hard to keep the show on the road. But I don't think there's any guarantee that they will be able to do that."
King's language echoed that of his last news conference in August, when the central bank slashed growth forecasts for this year, and he warned again that a "black cloud of uncertainty" was depressing British and U.S. business confidence.
The Bank is midway through a four-month programme of 50 billion pounds of gilt purchases to boost demand in Britain's recession-hit economy, and most economists expect the Bank to approve a further 50 billion pounds in November, which would take total asset purchases to 425 billion pounds.
King did not directly address November's decision, but insisted the asset purchase programme was still effective and that the Bank was also committed to keeping down inflation, which has been above its 2 percent target since December 2009.
DEBT TARGET SLIPPAGE
Weak growth has also bedevilled the government's flagship policy of eliminating the country's structural budget deficit within five years, and is making a secondary goal of putting total debt-to-GDP ration on a downward path by 2015 look increasingly unobtainable.
King - who has backed the policy in the past - said it might be "acceptable" for this debt target now to be missed.
Asked whether he was more relaxed now than before about Britain missing debt targets, he said: "If it's because the world economy has grown slowly and so we, in turn, have grown slowly then it would be acceptable to be in that position, yes."
"The plan did allow for the fact that if the economy were to grow slowly, then taxes would not rise as quickly and spending would be higher - so the deficit would be bigger," he added.
On financial regulation, King reiterated that he preferred the stricter rules proposed last year in an original government commission into banking to the laxer regulations now being considered, but that rapid implementation was his top priority.
On the Libor interest-rate fixing scandal that brought down the head of Barclays, Bob Diamond, King said several other banks had been involved too.
"The regulators will issue their reports in due course, and prosecutions may well emerge and I'm sure that large fines on banks will emerge. All this is deeply unsatisfactory," he said.
(Reporting by David Milliken and Matt Falloon; Editing by Sophie Hares)
Source: http://news.yahoo.com/king-says-euro-zone-threatens-slow-uk-recovery-184148868.html
2012 nfl schedule dishonored april 18 delonte west vanessa williams nicklas backstrom discovery shuttle
No comments:
Post a Comment