Britain risks downward economic spiral: BoE governor
27 Jun 2012
Bank of England governor Mervyn King told parliamentarians, the world was not halfway through the financial crisis that started in 2008.
He added Britain risked a downward spiral as businesses continued to put off investment against the backdrop of the raging euro zone turmoil.
His comments have added to expectations that the BoE would launch a new round of asset purchases next month under its quantitative easing programme, and pointed to the need for the central bank and British government to come up with further measures.
Evoking the depression-ridden 1930s, King said it would be difficult to restore confidence in the "black cloud" of uncertainty with consumer and business spending alone.
"We are in the middle of a deep crisis, with enormous challenges to put our own banking system right and challenges for the rest of the world that they are struggling with," King told the UK Parliament's Treasury Committee.
Britain's economy slipped into its second recession after the financial crisis took hold, around the turn of the year and fears of a longer slump are increasing as companies hold back investment and exports suffer from the euro zone crisis.
