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Can the Bank of England really act independent of the UK government?

Only a few weeks ago the Conservative party announced that it would beef-up the power of the Bank of England in the event of a win at the next election. This will probably be at the expense of the Financial Services Authority (FSA) and would cast a whole different light on the UK regulatory scene and the UK financial sector. However, even now there is some concern as to whether the Bank of England really has the independence which the UK government granted some time ago.

As we approach the next general election, there are growing concerns that the UK government is placing more and more pressure on the Bank of England and Mervyn King in particular to expand the quantitative easing program. Only a few weeks ago it seemed as though the program was coming to an end but now, all of a sudden, there is a growing suspicion that pressure is being placed upon the Bank of England to reignite the program in early 2010.

Even though Mervyn King has had many public spats with the UK government, and he is rumoured to have been on the verge of being axed, there is only so much that one man can do to fight the whole of the UK government. There have been many behind-the-scenes disagreements between the Bank of England and the UK Treasury, and indeed a number of these disagreements have been made public in rather blatant and pointed statements from each party. Whether the Bank of England is truly independent of the government in all but name is open to debate.

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