Moody’s doubts might not be making much difference to the actual economy, but they could
make a good deal of difference to the political battle being waged over it. George Osborne, of course, is citing this as further proof of the need for fiscal consolidation. Ed Balls, meanwhile, is
redoubling his call for a ‘change of course’ — and somewhat misleadingly too.
But what does Mervyn King think? Thanks to his comments in a press conference this morning, we don’t have to guess. Here’s how Bloomberg reported them earlier:
‘“It’s a reminder that we are facing a very challenging path to reduce the scale of our deficit so that, at some point, the ratio of national debt to gross domestic product
can start to fall back again, which has to be the objective,” King said at a press conference in London today. The government has a “long-term plan” for the budget and
“it’s very important that we keep to that.”’
Which reads like a strong endorsement of Osborne to me. After all, the Chancellor does plan to put debt on that downwards trajectory — whereas Labour, so far as we know, don’t.
It’s only the view of one man, of course. But this one man happens to be the Governor of the Bank of England, so his views do have a political impact. And it’s that impact that will set Labour
questioning King’s impartiality once again.
More Spectator for less. Stay informed leading up to the EU referendum and in the aftermath. Subscribe and receive 15 issues delivered for just £15, with full web and app access. Join us.