Bankers, business leaders and politicians attack Mervyn King

THE GOVERNOR of the Bank of England, Mervyn King, is under fire after his unusually forthright public statements about the threat posed by eurozone turmoil. MPs and business leaders have briefed against King to The Sunday Times after he warned of an "extraordinarily serious and threatening crisis".

Mark Field, the MP for the Cities of London and Westminster, told the newspaper: "The role of the governor of the Bank of England is to provide reassurance to the markets, not the opposite. It is not his job to up the ante."

He also suggested King was demob-happy: "The governor is now halfway through his second and final term in office and he has less to lose these days. However, he is opening up the office of governor to quite a lot of controversy."

Yesterday, The Times quoted an unnamed banking insider as accusing King of having only an "academic understanding of the markets" without the real-world experience necessary to back it up. The source added: "If you’re trying to promote confidence, this is perhaps not the way to do it."

King has raised hackles in the banking world. In a speech last Thursday he said banking was heading back into a full-blown "systemic crisis" and told lenders they must cut bonuses. Yet, in what is described by The Sunday Times as a "snub" to King, Barclays will hand out $5bn in bonuses and pay this year to its employees - a decrease of 10 per cent on the previous year. 

According to The Times, business leaders are also riled. Don McCarthy, the chairman of House of Fraser, said: “All people, whether governments, people in positions of responsibility or retailers, should be careful with what they say.

"Words can be taken out of context and it causes a lack of confidence.”

King is seen by some as having too much sway for an unelected figure. One MP said King's predecessor Eddie George had kept a much lower profile, adding: "This accentuates concerns of rightwing members of the Tory party that the governor of the Bank of England has too much power." ·