A man who ruled the Bank of England with an “iron fist”, who crushed dissenting voices and who encouraged the “tyranny of consensus”. Those were a few of the choice words David Blanchflower had for Mervyn King in his exclusive account of his time at the Bank in this week’s New Statesman.
The Bank of England governor was today forced to defend himself against Blanchflower’s attack in front of the Treasury select committee. He denied sidelining sceptical voices on the Bank’s Monetary Policy Committee (MPC).
“You can decide for yourself whether I do or do not have this iron fist, but look at the voting record,” he said, noting that he had been outvoted three times in the past.
Blanchflower, who resigned from the MPC in May, was for months alone in warning that drastic interest-rate cuts were needed to defend the economy from the impending recession.
King today repeated his claim that earlier cuts in rates would not have diminished the force of the financial crisis, and argued that no one could have foreseen the size of the recession.
But he did confess to hauling Blanchflower into his office for a dressing-down after he criticised the Bank’s August 2008 Inflation Report, in which the word “recession” did not feature, as “wishful thinking”.
Blanchflower will be writing a weekly economics column for the New Statesman, starting in our issue of 28 September. If Mervyn King wants to hone his defence he’d be wise to pick up a subscription.
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