Sir Mervyn King, the governor at Bank of England, shrouded Britain with despair in a Treasury Select Committee hearing. He openly displayed his pessimistic outlook with regard to Britain’s progress in the ongoing financial crisis citing that it could take Britons another five years, at the least, before they got out of the gutter.
“I don’t think we’re halfway through it”, he said. King further eroded the little remaining hope by accenting that his estimates of how long the crisis would take were on an ever increasing stretch.
Suggesting that there was no light at the end of the tunnel, a disheartened King told Members of Parliament that he was awed by the worrying rate at which the economical landscape was crumbling. King also noted that the Eurozone crisis was securing deeper anchorage. His outlook on emerging markets was also dim as he remarked on the rickety performance of previously booming markets like Asia.
Following recent initiatives from the IMF pushing for the slashing of interest rates, King responded by saying that slashed interests rate would only hurt small lenders. He backed his argument by mentioning that the already slashed interest rate of 0.5% (which by the way is a record low) was a heavy load on small lenders. He further added that further reduction would impose harm to the lenders.
Notwithstanding, King restored a strand of hope as he revealed that plans to pump in money into the banking system were in the pipeline. He also promised that the scheme would have exceedingly attractive terms; one that will hit the banks by surprise.
Sir Mervyn King adds to the list of analysts and officials who are skeptical about Europe’s financial crisis.