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| Eurozone crisis live: Mervyn King sees signs of recovery in UK | Eurozone crisis live: Mervyn King sees signs of recovery in UK |
| (40 minutes later) | |
| 9.32am: Growth in Britain's service sector has fallen faster than expected, according to data just released. | |
| The monthly service sector PMI (a measure of activity across the industry), has fallen to 53.3 in April, from 55.5 in March. That's the lowest reading since November, and a sharper slowdown (although not a contraction) than analysts had expected. | |
| Markit, the firm which compiled the data, also questioned whether Britain is really in recession (as the Office for National Statistics reported last week). | |
| Chris Williamson, Markit's chief economist, commented: | |
| Companies continued to report rising levels of new business, which helped drive confidence to the highest for over two years. From what we are hearing from panellists, this certainly does not sound like an economy in recession. | |
| That's a controversial argument, that will renew the dispute over whether the PMI data or the ONS's larger sample gives the best view of the UK economy. | |
| 9.02am: Here's some more instant reaction to Mervyn King's slot on the Today Programme. | |
| Conservative MEP Daniel Hannan is amused by King's argument that his successor should understand history, given the current quantitative easing programme: | |
| Mervyn King has one thing right: it's sensible to have a historian at the Bank of England. If I'm chosen, I promise to stop printing money. | |
| — Daniel Hannan (@DanHannanMEP) May 3, 2012 | |
| Ed Conway of Sky has taken issue with the governor's claim that the crisis wasn't preceded by a boom (which a competent central bank should have controlled): | |
| Chart that disproves Sir Mervyn's claim there was no sign economy growing unsustainably. Look at M4 build-up pre-crisis twitpic.com/9gnv9e | |
| — Ed Conway (@EdConwaySky) May 3, 2012 | |
| And economist Shaun Richards has renewed his call for more democracy at the Bank of England: | |
| Unhappy with Mervyn KIng and his arrogance and complacency? There is a democratic alternative. bit.ly/KTZDBb #gfc2 | |
| — Shaun Richards (@notayesmansecon) May 3, 2012 | |
| 8.47am: So what did we learn from Mervyn King's appearance on the Today Programme (see 8.11am onwards)? | |
| • By predicting 'steady, slow' growth this year, the governor of the Bank of England is offering support to the Treasury at a time when George Osborne's economic credibility is under fire. The 'big picture' here is that the government's fiscal plans are based on quite steady growth in the next few years - not a double-dip recession in which tax receipts will probably be lower than planned. | |
| • The Bank is sticking to its position that it should only bear limited responsibility for Britain's worst financial crisis in decades, and plenty of credit for how it handed the situation since. King may be willing to support future inquiries, but there's no chance of a thorough investigation of Threadneedle Street's mistakes anytime soon. | |
| • King's successor is more likely to have an academic background than a City one. He appeared to suggest that a historian would be well-placed to understand the current situation. So Jim O'Neill of Goldman Sachs, who implausably appears to be in the running, may not be a 5-1 shot after all. | |
| 8.28am: Mervyn King is reminded that he has been labelled a "tyrant" by a former member of the Bank of England's monetary policy committee, David Blanchflower. | 8.28am: Mervyn King is reminded that he has been labelled a "tyrant" by a former member of the Bank of England's monetary policy committee, David Blanchflower. |
| King tries to shrug off the jibe with a joke, replying Blanchflower actually called him "a cruel tyrant". He then denies the charge -- pointing out that there are nine people on the MPC, and on three occasions he has found himself in the minority when the committee votes. | King tries to shrug off the jibe with a joke, replying Blanchflower actually called him "a cruel tyrant". He then denies the charge -- pointing out that there are nine people on the MPC, and on three occasions he has found himself in the minority when the committee votes. |
| What I would ask people to do is look at how the system works. | What I would ask people to do is look at how the system works. |
| Would a tyrant allow himself to be outvoted three times? | Would a tyrant allow himself to be outvoted three times? |
| King touches briefly on the issue of his successor, saying it's important to have someone who understands the long view, rather than just short term issues. Ben Bernanke, of course, is an expert on the Great Depression of the 1930s. | King touches briefly on the issue of his successor, saying it's important to have someone who understands the long view, rather than just short term issues. Ben Bernanke, of course, is an expert on the Great Depression of the 1930s. |
| They then move onto sporting matters -- Merv is an Aston Villa fan (doesn't he have enough problems?), and the interview ends. Reaction to follow! | They then move onto sporting matters -- Merv is an Aston Villa fan (doesn't he have enough problems?), and the interview ends. Reaction to follow! |
| 8.23am: Sir Mervyn King predicts that the UK economy should come out of recession during 2012, as his interview on the Today Programme continues: | 8.23am: Sir Mervyn King predicts that the UK economy should come out of recession during 2012, as his interview on the Today Programme continues: |
| The Bank of England governor tells listeners that he sees signs of recovery as he tours the country: | The Bank of England governor tells listeners that he sees signs of recovery as he tours the country: |
| It's a patchy picture, but we see signs of recovery coming. | It's a patchy picture, but we see signs of recovery coming. |
| [I expect] Steady, slow recovery, later this year. | [I expect] Steady, slow recovery, later this year. |
| King pins the blame for Britain's double-dip on the consequences of higher food and energy costs. Without that, he says, we might have seen some growth in the first three months of 2012 rather than a 0.2% decline in GDP. | King pins the blame for Britain's double-dip on the consequences of higher food and energy costs. Without that, he says, we might have seen some growth in the first three months of 2012 rather than a 0.2% decline in GDP. |
| The issue of bankers pay is also raised -- and King says that he wouldn't really mind what bankers were paid, if the state wasn't providing guarantees to banks to prevent their failure. | The issue of bankers pay is also raised -- and King says that he wouldn't really mind what bankers were paid, if the state wasn't providing guarantees to banks to prevent their failure. |
| 8.17am: Why won't the Bank of England hold a proper inquiry into its conduct before, and during, the financial crisis, asks Evan Davis. | 8.17am: Why won't the Bank of England hold a proper inquiry into its conduct before, and during, the financial crisis, asks Evan Davis. |
| This is a key question -- many analysts, and some MPs, believe Threadneedle Street is refusing to allow us to see exactly what went wrong. | This is a key question -- many analysts, and some MPs, believe Threadneedle Street is refusing to allow us to see exactly what went wrong. |
| Not at all, Sir Mervyn King insists. We've already held an inquiry to learn the lessons -- back in 2008, indeed. | Not at all, Sir Mervyn King insists. We've already held an inquiry to learn the lessons -- back in 2008, indeed. |
| Davis suggests that we might have a few more lessons to learn now, but King puts up his defences -- pointing out that responsibility was split between the Bank of England, the Financial Services Authority and the Treasury. | Davis suggests that we might have a few more lessons to learn now, but King puts up his defences -- pointing out that responsibility was split between the Bank of England, the Financial Services Authority and the Treasury. |
| We are very happy to review the responsibilities we were given, and will continue to do that. | We are very happy to review the responsibilities we were given, and will continue to do that. |
| King also claims that the UK has learned many more lessons than other countries. Simon Nixon of the Wall Street Journal argues that other countries think Britain has learned the wrong lessons. | King also claims that the UK has learned many more lessons than other countries. Simon Nixon of the Wall Street Journal argues that other countries think Britain has learned the wrong lessons. |
| King says UK has learned more lessons than any other country. Many other countries think UK is nuts. | King says UK has learned more lessons than any other country. Many other countries think UK is nuts. |
| — Simon Nixon (@Simon_Nixon) May 3, 2012 | — Simon Nixon (@Simon_Nixon) May 3, 2012 |
| 8.13am: So where were the mistakes made, Governor? | |
| Mervyn King blames the "inbalance in the economy" that means the Bank of England could not protect the UK from the crisis. | Mervyn King blames the "inbalance in the economy" that means the Bank of England could not protect the UK from the crisis. |
| Evan Davis presses him on this -- what did the Bank actually get wrong? King insists that it was an error of vision: | Evan Davis presses him on this -- what did the Bank actually get wrong? King insists that it was an error of vision: |
| We were certainly late to the game in understanding the fragiliy of the banking sector, and the consequences when the fragility became clear. | We were certainly late to the game in understanding the fragiliy of the banking sector, and the consequences when the fragility became clear. |
| But we were in good company, he adds. In fact, the Bank of England was a relative success by keeping interest rates higher than many other G7 countries. | But we were in good company, he adds. In fact, the Bank of England was a relative success by keeping interest rates higher than many other G7 countries. |
| 8.11am: Mervyn King is on the Today Programe now, discussing his role in the financial crash. | 8.11am: Mervyn King is on the Today Programe now, discussing his role in the financial crash. |
| Evan Davis asks whether the Bank of England governor is really taking the blame for the crisis (as some headlines this morning say), or really blaming others? | Evan Davis asks whether the Bank of England governor is really taking the blame for the crisis (as some headlines this morning say), or really blaming others? |
| King argues that the scale of the crisis means that pretty much everyone involved much take some blame. This wasn't just the fault of a few people or a few banks. | King argues that the scale of the crisis means that pretty much everyone involved much take some blame. This wasn't just the fault of a few people or a few banks. |
| He adds: | He adds: |
| I accept our share of responsibility for going along with a banking sector that failed. | I accept our share of responsibility for going along with a banking sector that failed. |
| 8.01am: Sir Mervyn King is due on the BBC Radio 4 Today Programme in about 10 minutes time to discuss last night's speech on the financial crisis, and the lessons we can learn. | 8.01am: Sir Mervyn King is due on the BBC Radio 4 Today Programme in about 10 minutes time to discuss last night's speech on the financial crisis, and the lessons we can learn. |
| During the speech, King admitted that the Bank of England should have "shouted from the rooftops" about the looming disaster during the good years, while insisting that the real culprits were the Labour government (for not providing a decent regulatory framework) and the banking sector (for becoming dangerously overleveraged). | During the speech, King admitted that the Bank of England should have "shouted from the rooftops" about the looming disaster during the good years, while insisting that the real culprits were the Labour government (for not providing a decent regulatory framework) and the banking sector (for becoming dangerously overleveraged). |
| King's argument that the Bank was merely culpable of not shouting louder has been questioned by several commentators this morning. | King's argument that the Bank was merely culpable of not shouting louder has been questioned by several commentators this morning. |
| Our economics editor Larry Elliott writes: | Our economics editor Larry Elliott writes: |
| It was the banks and Gordon Brown wot did it. Neutered by New Labour and unable to prevent the City from behaving in an increasingly reckless fashion, the Bank of England could only issue reports and deliver sermons as Britain slid inexorably towards its worst financial and economic crisis since the 1930s. | It was the banks and Gordon Brown wot did it. Neutered by New Labour and unable to prevent the City from behaving in an increasingly reckless fashion, the Bank of England could only issue reports and deliver sermons as Britain slid inexorably towards its worst financial and economic crisis since the 1930s. |
| That is the recent past as seen through the eyes of Sir Mervyn King, and there will be many both in the financial sector and at Westminster who will raise more than a sceptical eyebrow at the governor's conclusions. King, they will argue, is now rewriting history in order to salvage his own reputation. | That is the recent past as seen through the eyes of Sir Mervyn King, and there will be many both in the financial sector and at Westminster who will raise more than a sceptical eyebrow at the governor's conclusions. King, they will argue, is now rewriting history in order to salvage his own reputation. |
| The Daily Telegraph's Damian Reece isn't convinced by King's argument: | The Daily Telegraph's Damian Reece isn't convinced by King's argument: |
| We got a mea culpa of sorts. But mainly we got self-justification from a leader of an organisation that was as culpable as any for the regulatory and policy failings that led to the crash but which has miraculously found itself about to acquire unprecedented regulatory powers over banking, financial services generally and the economy more broadly. This without any independent investigation and report into what went wrong within the Bank of England previously. | We got a mea culpa of sorts. But mainly we got self-justification from a leader of an organisation that was as culpable as any for the regulatory and policy failings that led to the crash but which has miraculously found itself about to acquire unprecedented regulatory powers over banking, financial services generally and the economy more broadly. This without any independent investigation and report into what went wrong within the Bank of England previously. |
| And things did go wrong. | And things did go wrong. |
| Claire Jones of the Financial Times said King's message was "Mea not really culpa". | Claire Jones of the Financial Times said King's message was "Mea not really culpa". |
| As a history lesson into central banks' less-than-stellar performance over recent years it's pretty revisionist. | As a history lesson into central banks' less-than-stellar performance over recent years it's pretty revisionist. |
| Do we get an apology on monetary authorities' failure to prevent the crisis? Or the promise of a review into how the Bank has performed during the turmoil? Not quite. There is some admission of guilt, but more half-truths and excuses. | Do we get an apology on monetary authorities' failure to prevent the crisis? Or the promise of a review into how the Bank has performed during the turmoil? Not quite. There is some admission of guilt, but more half-truths and excuses. |
| Alex Brummer of the Daily Mail focuses on King's warning that the system needs to be strengthened to avoid a repeat of the crisis: | Alex Brummer of the Daily Mail focuses on King's warning that the system needs to be strengthened to avoid a repeat of the crisis: |
| What the governor makes clear is that the Great Recession, and the financial crisis which accompanied it, is far from over. | What the governor makes clear is that the Great Recession, and the financial crisis which accompanied it, is far from over. |
| The threat of an implosion in euroland, where our banks are heavily invested, means that they need every bit of regulatory capital that they can get hold of to withstand the whirlwind. | The threat of an implosion in euroland, where our banks are heavily invested, means that they need every bit of regulatory capital that they can get hold of to withstand the whirlwind. |
| 7.50am: Today's agenda has a Spanish feel -- with this morning's debt auction, and the European Central Bank decamping from its usual base in Germany. The latest healthcheck of the UK service sector could also be interesting. | 7.50am: Today's agenda has a Spanish feel -- with this morning's debt auction, and the European Central Bank decamping from its usual base in Germany. The latest healthcheck of the UK service sector could also be interesting. |
| • Spanish debt auction: from 9.30am BST / 10.30am CEST • UK Services sector PMI for April: 9.30am BST • Eurozone producer prices index for March: 10am BST / 11am BST • ECB monetary policy decision: 12.45pm BST / 13.45pm CEST • ECB press conference: 1.30pm BST / 2.30pm CEST | • Spanish debt auction: from 9.30am BST / 10.30am CEST • UK Services sector PMI for April: 9.30am BST • Eurozone producer prices index for March: 10am BST / 11am BST • ECB monetary policy decision: 12.45pm BST / 13.45pm CEST • ECB press conference: 1.30pm BST / 2.30pm CEST |
| 7.45am: Good morning, and welcome to today's rolling coverage of the eurozone debt crisis. | 7.45am: Good morning, and welcome to today's rolling coverage of the eurozone debt crisis. |
| Coming up: the European Central Bank is holding its monthly policy-setting meeting today, in Barcelona instead of Frankfurt. Will it consider new measures to stimulate the European economy? Unlikely, but Mario Draghi will certainly be quizzed about the crisis at this afternoon's press conference. | Coming up: the European Central Bank is holding its monthly policy-setting meeting today, in Barcelona instead of Frankfurt. Will it consider new measures to stimulate the European economy? Unlikely, but Mario Draghi will certainly be quizzed about the crisis at this afternoon's press conference. |
| Also ... Spain will hold an auction of up to €2.5bn (£2bn) of three and five-year bonds. This is its first test of market confidence since being downgraded by S&P last week, and falling into recession on Monday. | Also ... Spain will hold an auction of up to €2.5bn (£2bn) of three and five-year bonds. This is its first test of market confidence since being downgraded by S&P last week, and falling into recession on Monday. |
| We'll also be tracking the reaction to Sir Mervyn King's BBC Today Programme Lecture, delivered last night. The Bank of England governor admitted to some failings in the run-up to the crisis, while pinning most of the blame on the banks and the Labour government. | We'll also be tracking the reaction to Sir Mervyn King's BBC Today Programme Lecture, delivered last night. The Bank of England governor admitted to some failings in the run-up to the crisis, while pinning most of the blame on the banks and the Labour government. |
| We can also watching political developments in France and Greece ahead of this weekend's elections. | We can also watching political developments in France and Greece ahead of this weekend's elections. |