Former Bank of England boss Mervyn King has warned Britain is ‘not in a comfortable position’ as it faces a debt pile.
Lord King of Lothbury, who led the Bank through the 2008 financial meltdown, said Britain would today be in a worse position to deal with a crisis.
Long-term UK borrowing costs have hit a 27-year high amid doubts about Labour’s ability to balance the books, giving bond markets the jitters.
Bank Governor Andrew Bailey dismissed a bond sell-off, saying it was in line with a global sell-off.
But King told a Lords select committee: ‘Some people have drawn comfort from the fact that the recent rise in long-term interest rates has been true across the G7, and it has. But that simply means we’re all in the same mess.
‘I think if there were to be another crisis, governments would cope with it, but it would come at a cost, with a much larger rise in the ratio of debt-to-GDP, and we would see interest rates go up to offset that. We’re not in a comfortable position.
‘I think we’d cope with another crisis but it wouldn’t be comfortable. We were in a much stronger position in 2007/08.’
Warning: Former Bank of England boss Mervyn King, who led the Bank through the 2008 financial meltdown, said Britain would today be in a worse position to deal with a crisis
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