Britain’s economic recovery is off track, Sir Mervyn King warned on Tuesday night as he defended the Bank of England’s decision to pump money into the economy again by purchasing £75bn of gilts over the next four months.
As consumer price inflation surged to 5.2 per cent in September, close to a 20-year high, the Bank governor justified the resumption of money printing – designed to raise growth and prices – on the grounds that he now thought it would take longer to return the economy, public finances and interest rates to normality.
“We were on track,” Sir Mervyn told a business audience in Liverpool, “but the problems in the euro area and the marked slowing in the world economy have lengthened the period over which a return to normality is likely”.