Downing St forced to clarify anti-fiscal comments

By staff

Downing Street has been forced to clarify statements made by Bank of England governor Mervyn King.

Mr King warned against further fiscal stimulus for the economy during an appearance before the Treasury committee today.

“We are facing very large fiscal deficit, there is no doubt,” he said.

He explained large scale tax cuts should not go ahead, but small scale targeted fiscal stimulus could.

“We can do more monetary easing, monetary policy should bear the brunt,” he continued.

The Tories leapt on the statement to show how isolated the prime minister was in his calls for a further fiscal stimulus – a neat turning of the tables from the accusations made against them by the prime minister until now.

“The Bank of England has supported the current action of fiscal stimulus,” the spokesman said.

“Any further action will be announced by the chancellor in the budget.”

But David Cameron told gathered reporters: “Gordon Brown is now isolated and alone on this. It’s time for the prime minister to think again.

“I think this is a defining moment in the recession,” he added.

The comments come as European leaders demonstrate outright opposition to British calls for further fiscal stimuli.