Bank of England Governor Mervyn King said the U.K. must press on with reforms to the banking industry and repeated his gloomy outlook for the euro-area debt crisis, which is impeding Britain’s economy. “If the rest of the world were growing normally, the rebalancing and recovery of our economy would be much easier,” King wrote in an article in the Mail on Sunday newspaper, published today. “But it isn’t. Even the rapidly expanding emerging-market economies are slowing, and the problems of the euro area continue with no obvious end in sight.” Bank of England Governor Mervyn King said the U.K.’s long-term economic performance will depend on measures such as “reforming our banking system so that banks focus less on making money in the short term, and more on building businesses to serve their customers.” Photographer: Chris Ratcliffe/Bloomberg King’s comments come days after the Bank of England cut its U.K. growth forecasts and said the outlook is “unusually uncertain.” The central bank is in the middle of a 50 billion- pound ($78 billion) four-month program of bond purchases and has left the door open to more stimulus for the economy if needed. King, a sports fan who attends the Wimbledon tennis tournament every year, pointed to the success of London’s Olympic Games and said achievements such as winning a gold medal take “years of hard work.” He said the U.K.’s long-term economic performance will depend on measures such as “reforming our banking system so that banks focus less on making money in the short term, and more on building businesses to serve their customers.” “The government’s plans to build a wall between banks’ risky trading on one side, and their lending to businesses and families on the other, will help,” King said. “As will the injection of new competition into our banking system. And, as recent scandals have shown, banks could learn a thing or two about fair play from the Olympic movement.” The Sunday Times today reported that U.K. Chancellor of the Exchequer George Osborne will advertise for a new Bank of England governor after several candidates dropped out of the race because of the Libor-rigging scandal. Remaining candidates have been told that the post will be advertised in the autumn and that they should register official interest then, the newspaper said, citing an unidentified candidate. King is due to retire in June. King, writing in the Mail, said while the Olympics may boost confidence, they “cannot alter the underlying economic situation we face.” “Unlike the Olympians who have thrilled us, our economy is not at full fitness right now,” King said. “But it is slowly healing. The conditions are in place for a recovery, and the Bank of England is, and will carry on, doing all we can to help bring it about.” The Bank of England increased its bond-purchase target to 375 billion pounds last month in an expansion that will run until November. It also introduced a program to boost credit, saying that a “major concern” for policy makers has been an increase in bank funding costs related to the euro-area debt turmoil. “But if we have learnt anything from the past fortnight, it is that commitment and hard work over a long period are necessary for eventual success,” King said, referring to the Olympics. “Now is the time to start training for the economic marathon -- and to follow the example of Team GB.” To contact the reporter on this story: Fergal O’Brien in London at fobrien@bloomberg.net To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.netEuro-Area Crisis Has ‘No Obvious End In Sight,’ BOE’s King Says
BOE Succession
Sunday, 12 August 2012
By Fergal O’Brien - Aug 12, 2012 11:38 AM GMT
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