Mervyn gives message of hope in growth

Recession felt most keenly in Northern Ireland, says King

Northern Ireland’s business community has an important role as “the agency of change and reconciliation”, Bank of England Governor Mervyn King has said.

The governor, who leaves the post later this year, acknowledged in last night’s speech at the CBI dinner at Titanic Belfast that the economic downturn had been felt more keenly in the province.

“The need to fix the banking system and introduce improvements to the future supply performance of the economy are, I know, felt even more keenly here in Northern Ireland than in Great Britain.

“And patience is a quality that has been demanded of you all in the province over many years.

“The business community is the key to the prosperity of Northern Ireland. I wish all of you success in the challenges ahead.”

His 10 years in the role will be remembered for the credit crunch and monetary stimulus measures taken by the bank to counter it, from cutting interest rates to a record low of 0.5% to £375bn in quantitative easing. These were summed up by Sir Mervyn last night as a “powerful combination of medicines” without which “depression” would have ensued.

He said the Northern Ireland economy has “significant” differences from the rest of the UK, but said he would nonetheless focus on the wider UK economy during his keenly-awaited speech.

While other major countries were in recovery mode, the UK still faced weak growth and above-target inflation. The UK economy had to rebalance, which was affecting the pace of recovery. Output had grown by only 3.5% since the middle of 2009, compared to 6% or more in other countries.

And a squeeze on real incomes meant that “real take-home pay is no higher than back in 2004”.

But he said that the right policies would ensure that progress is “delayed” and not “derailed”.

Measures to rebalance the economy long-term were required, which would lead to a return to more normal interest rate levels.

He said the economy was recovering slowly “but we are moving in the right direction”.

“If we embark on the type of programme I have outlined tonight, I believe we can roll back the black cloud of uncertainty darkening the outlook for demand, allow the rays of supply optimism to peer through, and sustain a recovery based on a successful rebalancing of the UK economy.”

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