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Bank chief urged to quit over leak

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Leaked documents appear to show Mervyn King criticised David Cameron and George Osborne before the election

The governor of the Bank of England has been urged to quit after it emerged he privately criticised David Cameron and George Osborne in the run-up to the general election.

Mervyn King confided to the US Ambassador to London, Louis Susman, in February that he had “great concern” about the then leader of the Opposition and shadow chancellor.

Mr Cameron and Mr Osborne, now Prime Minister and Chancellor respectively, lacked experience and tended to view issues merely in terms of their electoral impact, he said.

At pre-election meetings with them, Mr King had pressed the two men for more details about how they planned to reduce the UK’s deficit. He thought they had failed to grasp the pressures they would face to cut spending, the governor told Mr Susman.

His comments – which were relayed to US Secretary of State Hillary Clinton – were revealed in the latest tranche of US embassy cables obtained by WikiLeaks. They are embarrassing for Mr Cameron and Mr Osborne and threaten to damage the Government’s relations with the governor.

A former member of the Bank of England’s interest rate-setting monetary policy committee has accused Mr King of compromising Threadneedle Street’s independence. Writing on the Guardian website, Professor David Blanchflower, who stood down from the MPC in May last year and has clashed with Mr King before, said the governor had a “thirst for power and influence” which had “clouded his judgment one too many times”.

“He has now committed the unforgivable sin of compromising the independence of the Bank of England,” he wrote. “He is expected to be politically neutral but he has shown himself to be politically biased and as a result is now in an untenable position. King must go.”

Prof Blanchflower said the leaked cable showed that Mr King had attempted to “co-author the coalition’s strategy on the deficit”, adding: “That is definitely not part of his job description.”

Labour MPs also seized on the governor’s remarks as evidence that he had doubts about the Tories’ deficit-reduction strategy. Chuka Umunna, a parliamentary aide to Labour leader Ed Miliband, said: “Ministers parrot lines wrongly claiming Labour had no plan for deficit reduction, but now we learn the Bank of England governor had grave concerns that it was they who lacked a plan.”

But Tory MP Patrick Mercer said the governor should be kept in his job as an “experienced hand” at a difficult economic time, even if his independence had been compromised.

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