BoE chief Sir Mervyn King sees no end to eurozone saga as France heads back toward recession

| August 9, 2012 | 0 Comments

By
Hugo Duncan

16:35 EST, 8 August 2012


|

16:35 EST, 8 August 2012

The crisis in the eurozone has descended into ‘a saga that goes on and on’ and is holding back the British economy, the Governor of the Bank of England has declared.

Speaking on the eve of the fifth anniversary of the start of the credit crunch, Sir Mervyn King said the global economy is in a far worse state than he expected.

He pointed the finger at eurozone leaders who have failed  to calm the financial storm that threatens to tear the single currency apart.

Concerns: Sir Mervyn King says the financial storm still threatens to tear the single currency apart

Concerns: Sir Mervyn King says the financial storm still threatens to tear the single currency apart

‘It’s a saga that goes on and on and on,’ the Bank chief said. ‘The idea that we have come to the end of it is unrealistic.

‘There is still a long way to go. We watch with concern and great interest.’
It came as the Bank slashed its UK growth forecasts for this year to zero from the 0.8 per cent it expected just three months ago.

Economists warned even that may be
too optimistic with Britain stuck in the longest  double-dip recession
for more than half a century and the  eurozone on the verge of meltdown.

Trade figures published today will
show how the single currency crisis has hit demand for UK goods and
dashed hopes of an export-led recovery.

‘The recession in the euro area is
damaging demand for our exports,’ said King. ‘A black cloud of
uncertainty is hanging over investment. Our efforts to bring about a
rebalancing of the UK economy will require patience.’

A raft of grim news from the eurozone raised fresh fears over the future of the single currency.

The Bank of France said France’s
economy will fall back into recession this summer as figures showed
exports to Italy and Spain tumbled. Figures in Berlin showed German
exports also fell in June by 1.5 per cent as the region’s last bastion
of economic hope faltered.

And industrial production fell in Germany and Spain as the economic malaise deepened.

Otmar Issing, one of the founding
fathers of the euro and a former European Central Bank chief economist,
said some countries will not be able to stay in the single currency
bloc.

In a startling admission, he said:
‘Everything speaks in favour of saving the euro area. How many countries
will be able to  be part of it in the long term remains to be seen.’

The credit crunch is widely seen as
having started five years ago today on August 9, 2007, when French bank
BNP Paribas revealed its hedge funds were in trouble.

Adam Applegarth, former boss of Northern Rock, described it as ‘the day the world changed’.

Here’s what other readers have said. Why not add your thoughts,
or debate this issue live on our message boards.

The comments below have not been moderated.

Just wait until the dark nights start and the Grimm prospect of winter with no respite dawns on people….. Keep loading the ammunition and stockpiling the rice boys

” Adam Applegarth, former boss of Northern Rock, described it as ‘the day the world changed’. ”
Well, he was obviously good at his job.. You couldn’t make it up.

This was the same BoE Governor that denied that there was a recession in the first 18 months of the credit crunch. Why do these experts fail so miserably? Now he is passing on the buck and blame to Europe. Is there a demand in UK? No, because consumers have no money to spend. Why don’t you treat the internal problem before trying to fix the external one of which you have no control?
– Femi O, UK, 8/8/2012 23:00 The recession occurred a year after the credit crunch. There is plenty of money around but people are loathe to spend it and companies are not investing. And bank bashing is not helping either. They are having to build up their capital base and set aside money to split their retail and investment operations. AND they are exposed to billions in Eurozone debts.

The first paragraph says the Eurozone is the problem. Then the second paragraph its the Global Economy that is the problem. Which is it? Usual clueless experts again.
– Graeme, Hampshire, 08/8/2012 23:13. Hint. The EU is the largest trading block in the world.

This Government have spent more money than Labour ever thought of, and what do we have to show? nothing Lbour fixed the Hospitals like it or not they did.
Cameron Osbourne and Clegg are looking after the Bankers and the very rich, so middle England will pay until we have the guts again to get shot.

How long are you going to keep blaming the euro for the mess you are in. You have had three years to “withdraw” from Europe and trade elsewhere so where does the fault lay. It has taken you three years to state the obvious, UK will hopefully benefit when you go.

good old merv! he will guarantee to empty your pockets.

The political dream of a united Europe is over, if it ever had a chance to start. Too many differences in cultures, economies and ethics. The Brits are not like the Greeks who are not like the Dutch who are not like the Spanish. End of story. The quicker the Mark, Franc, Pesata return the better. Yes there will some more short term turmoil but eventually each currency will find its level, we can all then move on.

The first paragraph says the Eurozone is the problem. Then the second paragraph its the Global Economy that is the problem. Which is it? Usual clueless experts again.

This was the same BoE Governor that denied that there was a recession in the first 18 months of the credit crunch. Why do these experts fail so miserably? Now he is passing on the buck and blame to Europe. Is there a demand in UK?
No, because consumers have no money to spend. Why don’t you treat the internal problem before trying to fix the external one of which you have no control?

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