Bank Of England welcomes coalition budget deficit plans

Mervyn King has today stepped aside from regular tradition in the UK and gave his backing to the Conservative party and the Liberal Democrats party plans for a £6 billion reduction in public sector spending this year. Historically the Bank of England, via the Gov of the Bank of England, has been very reluctant to become involved in political matters although today saw something very different.

Mervyn King believes that the £6 billion public sector reduction plans are both sensible and required and form a welcome first step for the coalition government. There is no doubt that the UK budget deficit will be target number one for the coalition government and ultimately if the UK government takes too much out of the economy then we risk moving back into recession. However, if the UK government does not reduce the public sector spending plans of the Labour Party then the budget deficit will be more and more difficult to control.

It was also interesting to see the UK currency react positively to the announcement of a coalition government which now boasts a number of well respected politicians from both sides of the coalition. Is this the dawn of a new era in UK politics?