Mervyn King blew into the open the lack of trust and rancour between the bank of England and the Treasury on Wednesday as he complained he had not been adequately consulted on Alistair Darling’s plans for reform of banking regulations.
The Bank governor also heightened tensions over fiscal policy by insisting that the government’s “extraordinary” and “enormous” levels of borrowing had to be reduced faster than the Treasury planned, even if the economic recovery was only as strong as Mr Darling pencilled in at the Budget.
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