Downing Street Says » Governor of the Bank of England

Asked for the Prime Minister s response to Mervyn King s comments yesterday regarding the UK deficit, the PMS said the Pre Budget Report (PBR) and the Budget set out future plans, which put the public finances on a path to half the deficit over four years. As we were saying yesterday, it was difficult to think of any other country in the world that was legislating now and setting out specific plans for the future in order to ensure that their public finances were on a sustainable path. We were setting out very clear and transparent plans for our public finances for the future.

Asked if it was the case that there wouldn t be a Comprehensive Spending Review this autumn, the PMS said that decisions on the timing of the next spending review were a matter for the Chancellor.

Asked if the PMS was saying that the UK was the only country that had a plan for deficit reduction, the PMS said that we were setting out specific plans that reduced our deficit in future years. Most people would say that we were one of the leading countries in terms of the future commitments that were being entered into, particularly in relation to future tax rises.

Asked if the Prime Minister was worried that Mervyn King was not consulted on the Treasury s White Paper, the PMS said that there was very close discussion between the Governor and the Chancellor, and more generally between the Bank of England and the Treasury, on financial regulation matters. The Treasury was still working on the exact drafting of the White Paper.

Asked if the Prime Minister took issue with the Governor s premise that Britain was already on an unsustainable fiscal path without the global downturn, the PMS said that we went into this downturn with one of the lowest levels of public debt as a proportion of GDP. These were extraordinary times and they required extraordinary action. The Governor himself supported the fiscal action we took in the PBR last year, which was when we announced a significant fiscal stimulus.

Asked if the Governor could expect to be consulted on the White Paper before its publication, the PMS said yes.

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» Thursday, June 25, 2009

Governor of the Bank of England

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