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Mervyn King warns UK government about overspending

Mervyn King, Gov of the Bank of England, has today warned Gordon Brown that the government risks harming the UK economy in the long-term if further significant spending is targeted at the economy. The worryingly weak situation regarding net debt in the UK and a government budget expected to exceed £100 billion next year has prompted a rebuke from the headman at the Bank of England.

Slowly but surely we have seen a gap emerging between the Bank of England and the UK government with regards to excessive spending, rescue packages and fiscal stimulus programs. There would also appear to be a split within the Bank of England regarding the future direction of UK base rates which currently stand at 0.5%. After initially seemingly been at odds when the economic downturn began, the Bank of England and the government did for a while seem to be "singing from the same hymn sheet". However, since the introduction of Lord Mandelson and various accusations he has made towards the Bank of England it would appear that this relationship has become somewhat strained.

The last few months have been very difficult for Gordon Brown although it looks as though the next few months could be even worse as we move along towards the next general election.

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