Top banker adds to economic gloom with warning

Published on Friday 20 June 2008 10:35

OUTGOING Bank of England deputy governor Sir John Gieve has added his voice to warnings over the economy and said the next year was “not going to be comfortable for anybody”.

Sir John, who has resigned as deputy governor in charge of financial stability, told business leaders the current climate was the “most challenging” faced by the Bank in 11 years of independence.

He said: “The next year is not going to be comfortable for anyone and we already hear calls to change the system, the target, and our focus on inflation.

“But the new framework and the independence of the Bank was designed for difficult times as well as for plain sailing.”

His comments follow bleak economic warnings from Chancellor Alistair Darling and Bank Governor Mervyn King in their Mansion House speeches to the City this week after inflation soared to 3.3 per cent in May, fuelled by spiralling oil, food and household energy bills.

Sir John was due to serve until 2011, but will step down next year after reforms to banking laws have been introduced in the wake of the Northern Rock crisis.

These give the Bank of England statutory responsibility for financial stability as well as powers to deal with failing banks.

Meanwhile, the Bank’s chief economist, Charles Bean, was also confirmed as a deputy governor yesterday.