Is Mervyn King right to suggest economic recovery is in sight?
Bank of England governor makes cheery forecast but some ask 'why should we believe him?'
OUTGOING Bank of England governor Sir Mervyn King has signalled that a recovery is "in sight" nearly five years after the economic crisis began.
In an interview with ITV News ahead of next week's Budget, Sir Mervyn claimed "there is momentum behind the recovery that's coming" and added that "progress" had been made towards rebalancing Britain's economy.
"During the course of 2013 we will see the recovering come into sight," he said. "When, I can't possibly tell you and it would be silly of me to pretend that I could."
As the Daily Telegraph notes, Sir Mervyn's comments were among his most upbeat since the economic crisis began, and a marked change from his gloomy tone as recently as November, when he said the UK faced a period of "persistently low growth".
But Sir Mervyn's former colleague Danny Blanchflower was more sceptical. The former Bank of England monetary policy committee member tweeted: "He has said this in each of the last 20 inflation reports why believe him now?"
While Blanchflower took the intervention with a pinch of salt, Sir Mervyn's comments did move the markets. After the governor promised the Bank of England was "certainly not looking to push Sterling down", the pound rose against the dollar and the euro this morning.
For the Daily Mail's Alex Brummer, Sir Mervyn's interview was a welcome wake-up call for the UK's "economic commentariat". The governor pointed out that if you strip out the construction industry and North Sea oil production, Britain's economy is nowhere near "triple-dip territory" and actually grew by 1.5 per cent in 2012.
"That is not a narrative that has been given much airing in the media until now," Brummer writes. "After a week when gloom has again descended on the economic commentariat, on the random evidence of one month's industrial production figures, King provides a useful check." ·