Ben Brogan’s got it right. Mervyn King has just “blown a hole” in Gordon Brown’s strategy for the next few weeks and months, by telling the Treasury Select Committee that there’s no case for another fiscal stimulus. Here are the BoE governor’s exact words:
“Given how big [UK fiscal] deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits.
The level of the fiscal position in the UK is not one that would say: ‘Well, why don’t we just engage in another significant round of fiscal expansion?'”
If Brown now does push for a further fiscal stimulus at the G20 and in April’s Budget, then he’s now doing so against the advice of King, some prominent organisations and perhaps even his own Chancellor – in which case, you hardly sense the media and public will be behind him.
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