Bank of England Governor Sir Mervyn King 'A Tyrant' Says Economist David Blanchflower

'Sir Mervyn Was A Tyrant'
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Bank of England Governor Sir Mervyn King has been branded a "tyrant" by a former member of the Bank's key interest rate-setting committee.

In an outspoken attack, economist David Blanchflower accused him of constantly looking to his own advantage and using "extreme and cruel tactics" in his running of the Bank.

In an article for the New Statesman magazine, he said that Sir Mervyn - who retires next year - had had been unprepared for both the financial crash of 2008 and the run on Northern Rock in 2007, despite "obvious signs" of trouble.

Professor Blanchflower, who served as an outside expert on the the Bank's Monetary Policy Committee (MPC) from 2006 to 2009, said it was essential now that Sir Mervyn's successor was not "tainted" by the financial crisis.

"It's never easy replacing a tyrant but there are huge benefits from doing so. The pain is usually worth it," he said.

"A tyrant looks to his own advantage rather than that of his subjects and uses extreme and cruel tactics - which pretty much sums up how I feel Mervyn King has run the Bank of England in his role as Governor since 2003."

Prof Blanchflower said Sir Mervyn had resolutely resisted any investigation of the Bank's performance during the financial crisis "presumably because of what it would uncover".

"King was unprepared for the crisis and, even as late as the summer of 2008, did not even see it coming," he said.

"For many months, even through 2008 and 2009, he kept expecting a wage explosion in the UK that was never going to happen.

"King was also unprepared for the bank run on Northern Rock in August 2007, even though there were obvious signs that banks that depended on wholesale money markets were in trouble."

Prof Blanchflower, who advocated a policy of aggressive interest rate cuts to revive the economy, said Sir Mervyn had made it clear to him that he was not his choice to serve on the MPC.

"One reliable source told me that people at the Bank were briefing against me. It was hard to find staff and I was always the outsider. This was nothing new," he said.

"I have never worked at a place that had such low morale."

He also accused Sir Mervyn of having "crossed the line" when he endorsed the coalition Government's austerity programme.

"The Governor of the Bank of England is responsible for monetary policy, not fiscal policy," he said.