King warns of the ‘long hard slog’ to clear Britain’s debt

The Governor of the Bank of England, Mervyn King, has warned that the nation faces a ‘long hard slog’ to recovery, criticised the government for running too high a level of borrowing as the nation entered the present crisis, and called on the Chancellor to produce a ‘credible statement’ of how he plans to get the borrowing down. Mr King’s outspoken remarks, given in testimony to the Treasury Select Committee and close to breaking the convention that the bank does not become embroiled in political arguments, came as the Organisation for Economic Co-Operation and Development said that the British government’s finances were sinking into the red faster than those of any other major industrial nation. The OECD forecast that the British economy would shrink by 4.3 per cent this year, with unemployment set to approach the 10 per cent mark: ‘The financial crisis has severely impaired the supply of credit and house prices have fallen sharply, thus restraining business and household spending.’