Labour’s Shadow Chancellor Ed Balls has warned that the governor of the Bank of England should
be wary of being drawn into the political arena and allying the Bank too closely to the current government’s fiscal policies.
Speaking to the Financial Times, he said that the Bank’s governor Mervyn King risked the Bank’s
reputation by supporting government policies that could lead the country into a double-dip
recession.
In a recent speech, King appeared to defend the coalition government’s economic policies, despite
increasing inflation and a surprise contraction in the country’s economy in the final quarter of last
year.
Ed Balls said, “The last thing you ever want is for the Bank of England to be drawn into the political
arena. Central bank governors have to be very careful about tying themselves too closely to fiscal
strategies, especially when they are extreme and are making their job on monetary policy more
complicated.”
Balls was appointed as the Labour Party’s Shadow Chancellor in January, after Alan Johnson quit
the post for personal reasons. He has criticized the Conservative-led government’s tough economic
policies, with which they hope to tackle the nation’s budget deficit. Balls has argued that the
government’s current austerity drive will damage the economy.
The Shadow Chancellor said in his interview that George Osborne should restrain both the speed
and scale of the current cuts in public spending.
