Brown Denies Split With Bank Of England Head King


Prime minister Brown yesterday attempted to play down reports of rifts with the Bank of England, and between the EU and the US on the best way to deal with the capitalist crisis.

Speaking in New York, he said there was ‘far more agreement’ than had been claimed.

At a question and answer session hosted by the Wall Street Journal, he said he hoped the G20 would see agreements on help for central and eastern Europe, which had been hard hit by the economic crisis.

Asked whether there was a split between Europe’s focus on strengthening regulation and the US concentration on a stimulus, he said both were important.

Instead he believed they needed to look at, together, what had been done in terms of fiscal stimulus, quantitative easing and interest rates, and their effects before deciding what should happen next.

‘I see a consensus, not a disagreement, on that,’ he said.

He also played down comments made by Governor of the Bank of England Mervyn King, that the government should be cautious about a further fiscal stimulus, given the high levels of UK debt.

Brown said: ‘If you put that question to the governor of the Bank of England he will say, as he said when he signed the G20 communique, that you have to take whatever action is necessary for growth.’

Meanwhile, Brown’s fiscal stimulus policy was plunged into uncertainty after the government failed to find a buyer for some of its debt yesterday morning, the first such failure in seven years.

City dealers blamed Bank Governor King for sowing confusion.

The UK debt management office said it attracted just £1.62bn of bids for a sale of £1.75bn of 40-year gilts.

Normally, such auctions of government debt are oversubscribed. This was the first failure of an auction since 2002.

King had told the House of Commons Treasury committee: ‘Given how big these deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of the those deficits.’

He added: ‘I think the fiscal position in the UK is not one where we could say, well, why don’t we just engage in another significant round of fiscal expansion?’

Meanwhile, the Czech prime minister condemned US President Barack Obama’s economic recovery plans as ‘a way to hell’.

Mirek Topolanek, who lost a ‘no confidence’ vote in his own parliament on Tuesday, was speaking in the European Parliament, in his capacity as current holder of the EU presidency.

Hours before his remarks, President Obama had appealed for all countries to bear the burden of spending to stimulate the world economy.

Topolanek said the biggest success of last week’s EU summit was its refusal to copy the US example.

Topolanek said the United States was not taking ‘the right path’.

He attacked the US’s growing budget deficit and the ‘Buy America’ campaign, saying ‘all of these steps, these combinations and permanency is the way to hell’.

Topolanek said: ‘We need to read the history books and the lessons of history and the biggest success of the (EU) is the refusal to go this way.’