UK faces an era that could be tougher than 2008, Lord King, former BoE governor — MercoPress

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UK faces an era that could be tougher than 2008, former BoE Governor Lord King

Tuesday, October 25, 2022 – 09:10 UTC


Lord King said that “public spending is not going down, rather it will go up, so taxes will have to go up to fill the gap that currently exists”.

Lord Mervyn King, Governor of the Bank of England from 2003 to 2013, said the UK faced an era of great austerity to stabilize the economy, with the average person facing “significantly higher taxes to fund public spending.

Speaking on Sunday with the BBCLord King said “it is time to stand up” with the public about the difficulties facing the country.

He said “public spending is not going down, rather it will go up, so taxes will have to go up to fill the gap that currently exists.”

“That doesn’t paint a very happy picture for the next few years,” Lord King said.

“But what we need is a government that will honestly tell us that there is a reduction in our national standard of living because we decided to help Ukraine and confront Russia and that means we’re all going to have to share the burden, we can’t put it all on our kids and grandkids.

After the 2007-2008 financial crisis, when the banking sector nearly collapsed, the new Conservative-Liberal Democrat coalition government announced the biggest public spending cuts since the end of World War II.

Asked if the UK might face a similar period of austerity, Lord King, who was governor at the time, said: “In some ways it might be more difficult.”

He said: ‘The challenge is that if we want European levels of social benefits and public spending, you can’t fund that with US levels of tax rates, so we may have to deal with the need to have significantly higher taxes for the average person.

Lord King also reiterated his criticism of central banks for failing to curb inflation, which is currently at a 40-year high of 10.1%.

He said major central banks, including the Bank of England, had continued to “print money” to support their economies during the Covid shutdowns. This, he said, contributed to higher inflation.

Meanwhile, Guy Hands, a former Tory supporter and outspoken Brexit critic, said the UK was “doomed” and on its way to becoming “Europe’s sick man”.

Mr Hands, who runs private equity firm Terra Firma, predicted lower profits and a possible bailout from the International Monetary Fund and said the Conservative Party had to admit it had made ‘mistakes’.

“The reality is when they did Brexit, they had a dream. And the dream was a low-tax, low-profit economy,” Hands told the from the BBC Today’s program.

Outgoing Prime Minister Liz Truss had tried to push through those policies, he said, but it didn’t work.

‘Once you accept that you can’t actually do this, then the Brexit that has been done is completely hopeless and will only lead Britain into a dire economic state,’ Mr Hands said.

“So I think [if] the conservative party can admit the mistake they made and how they negotiated Brexit and have someone in charge who actually has the intellectual capacity and the authority to renegotiate Brexit there is a possibility of redressing the economy, but without it the economy is frankly doomed.”

However, he added that the Conservative Party was, in his view, not fit to lead the country.

“I think he needs to stop waging his own internal wars and focus on what needs to be done in the area of ​​the economy and admit some of the mistakes they’ve made over the last six years that frankly put this country on the path to being the sick man of Europe,” he said.

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