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Topics: Mervyn King| Bank of England| quantitative easing| interest rate| Inflation
Bank of England governor Mervyn King last night backed calls for limits on boardroom pay, in a speech in which he also said the UK's economic recovery would be "arduous" and hinted at a further round of quantitative easing.
Speaking last night in Brighton, King echoed similar calls from the coalition government, particularly business secretary Vince Cable's recent proposals to crack down on boardroom pay.
He said it was a "tragedy" that those who suffered most through the financial crisis had no part to play in it, while others had been excused as they were thought to be "too important to fail", a reference to the bailed-out banks.
"The legitimacy of a market economy will inevitably be challenged if rewards go disproportionately to a small elite, especially one which benefited from the support of taxpayers," he added.
"Those taking decisions on remuneration, in the financial sector and elsewhere, need to understand that a market economy rests not just on incentives, but on the acceptance that the distribution of rewards is fair.
"That sense of fairness underpins the commitment to a market economy. An even bigger tragedy would be to deny the prosperity that flows from a market economy to those who need it most."
Elsewhere in his speech, King reasserted his view that inflation would continue to go down this year, with the effect of the rise in VAT, import costs and energy prices waning.
However, he warned of three continuing challenges which would linger over 2012: tight credit conditions, higher household saving and the "dark clouds hanging over the world economy".
He added the economic recovery would be "arduous, long and uneven" and also hinted at the possibility of an expansion of the Bank's asset purchase programme to prevent inflation falling below the 2% target.
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Gordon Gekko still lives
Teh problem with whats going on with banks is that the generation brought up on Gordon Gekko is still running things and couldn't give a toss about the 'little people'. They know perfectly well what should be done but years of having no care of the repercussions of what they do has made them immune to reality. What teh politicians do not understand is that for every person whop upos and leaves in any bank there is a shed load of equally good people only too happy to fill the desk. Nothing will work on this issue until Mr Cameron starts to understand the world doesn;t start or stop with the Bullingdon Club. You would have thought that Mr. Cameron would have seen the damage a Mr G Brown generated by allowing his city pals to control his thinking, but it looks like he and Mr Osborne prefer the company of delux banking suites to the harsh reality of the day to working environmments. Shame on them
Posted by: Robert Marshall
Thick as thieves
What do the politicians (from both sides of the house) and the FSA bosses have in common? One day when their days of power are over they will both be looking for nice little earners in the private sector - where will they go for that? The banks of course - a nice little executive directorship here and there, a job on a quango for homeless lesbians for the Mrs to keep her busy - there will be no change in the status quo - noses too far in the troughs.
Posted by: Paul Burnside
Numpty
The reason we have a'monied' elite, is because of corporatism caused by the policies promoted by MK and the cronyism of New Labour. Freedom and markets stop cronyism and corporatism dead. It is isn't about 'regulating' - i.e. arbitrary rulings on 'fairness' by capricious and unaccounatble bureaucrats - pay. It's about getting out of the way of the rest of us by returning to us our freedoms to out-compete New labours/MKs/ The FSA's etc cronies.
Posted by: Steven Farrall
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A target or a minimum?
I didn't realise that a 2% inflation target meant that inflation had to be at least 2%
Posted by: Paul 2