Mervyn King calls for lower public borrowing

The governor of the Bank of England has called for lower public borrowing. Mr King told MPs yesterday the Budget cuts were not "clear enough".

He said he was "more uncertain now than ever" on the prospect of the UK making a quick recovery from recession.

But then came the juicy bits:

"The scale of the deficit is truly extraordinary. 12.5% of GDP is not something that anybody would have anticipated even a year or two ago"

"But it also reflects the fact that we came into this crisis with fiscal policy itself on a path that wasn't itself sustainable and a correction was needed."

"There will certainly need to be a plan for the lifetime of the next parliament, contingent on the state of the economy, to show how those deficits will be brought down if the economy recovers to reach levels of deficits below those which were shown in the Budget figures."

Mr King said it was too early to say how long the UK's recovery from recession would take.

"There are genuine concerns about how quickly the recovery will pick up. Looking at the clear evidence, [businesses] are finding it hard to access credit from the banking system."

"A combination of that and real uncertainty over the global economy makes it very difficult to be confident of a rapid recovery."

The Bank's Paul Fisher added: "It could take two or three years before banks get really comfortable to lend again."

It is refreshing to hear public servants who are willing to speak the truth.