It is rare to have a news story by Irwin Stelzer, he normally writes excellent columns for The Spectator and The Sunday Times. But today’s splash in The Sunday Times jumps out for more reasons than the byline. He reveals what I have only heard whispered: that there is paralysis at the very apex of our financial system. There is a dysfunctional relationship between the top three figures: Mervyn King (pictured), the governor of the Bank of England, The Chancellor and the Prime Minister.
Stelzer reveals that Brown is refusing to act to repair the regulatory structure he set up in 1997. It didn’t work then, as Eddie George told the then Chancellor. Proof of this lies in the humiliating fact that Britain is the only country in the world where the global credit crunch led to a run on the bank.
But King, Stelzer says, believes Brown is paralysed by a collapse in morale at No10, all terrified by the polls. He further reveals the Treasury’s view that King is “naïve”. Even by the standards of Team Brown, it is simply insane to brief against one’s central banker in this way.
Intel like this is gold dust in journalism. Banking sources are the hardest to mine, and central bankers are normally the most secretive of the lot as one word from them can literally move markets. So it is truly extraordinary that we are told by a source as good as Stelzer that the Bank of England governor considers Brown “unable to focus”.
I wonder if all this was in a Stelzer column which a sharp-eyed John Witherow realised would make a splash. Anyway, Britain will next year face a pernicious credit crunch with a regulatory banking structure unfit for purpose with the governor of the Bank of and the Prime Minister briefing against each other and Brown’s puppet Chancellor struggling to be taken seriously by anyone. I hear that British banks are already running to the European Central Banks for loans, as they have lost confidence in this country – and that all this has deeply damaged London’s financial reputation, on which so much of our economy depends. Result: the ghost of Christmas future has just got a whole lot uglier.
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