Andrew Grice has a great scoop in The Independent today about tensions between Mervyn King and the government following King’s remarks about the need to get the debt down and the failure to consult him over changes to banking regulations. Grice quotes one Cabinet source as saying, "King is fighting a turf war with the FSA. The Tories are flattering him, appealing to his vanity and using him to play politics."
Having reappointed King as governor of the Bank of England, the government has relatively little leverage over him. King also knows that within a year, the Tories are likely to be in government so an increasing closeness between him and them is only to be expected. The Tories also know that King is a great shield for them to advances behind on issues like the deficit, the need to cut public spending and the failures of the Brown and Balls devised regulatory system.
Hat tip: Paul Waugh http://waugh.standard.co.uk/2009/06/knives-out-for-merv-mandelson-not-to-blame.html