Mervyn King bows out

Bank of England governor Sir Mervyn King, due to be replaced by Canada's Mark Carney on Monday 1 July, made his final appearance in front of the Treasury Select Committee this week. King spent 22 years at the Bank, starting as its chief economist and becoming deputy governor before his ten-year stint in the top job began. He noted that five years on from the global financial crisis, the British economy's recovery was still "too weak to be satisfactory" and took a final potshot at Britain's banks. He said that they were putting undue pressure on regulators to water down demands to raise capital.

What the commentators said

The same goes for the housing bubble. "It should have been clear to King", said the Centre for Economic and Policy Research, "that this asset bubble would burst at some point and that it would have severe consequences for the UK economy. However, he took no measures to rein it in, apparently oblivious to the dangers." Now we are grappling with a downturn "more severe than the Great Depression".

The trouble was the Bank's "monomaniacal obsession" with targeting inflation, a policy originally suggested by King, noted Iain Martin in The Daily Telegraph. This didn't include asset inflation, however. So the housing and credit bubbles were overlooked. The bottom line: King was not solely to blame for the crash. "But he was up there on the bridge throughout, while Gordon Brown strode up and down the decks assuring the passengers that all was well."

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