Mervyn King looks to have rather shot Gordon Brown’s fox on the fiscal stimulus. It is, of course, the central plank in the Government’s economic policy that the world, following the heroic example of Chairman Gordon, needs another fiscal stimulus to preserve us all from the horrors of another depression. Here’s the Chairman of the Bank of England:
"I'm sure the government will want to be cautious in this respect. There is no doubt we are facing very large fiscal deficits over the next 2-3 years.
"Given how big those deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits.
"The level of the fiscal position in the UK is not one that would say: 'Well, why don't we just engage in another significant round of fiscal expansion?'"
In other words, Britain’s too broke to afford it. Any thoughts Gordon?