King’s Praise for Osborne Criticized by Labour as Britain Votes

Bank of England Governor Mervyn King’s praise for Chancellor of the Exchequer George Osborne’s budget cutting was criticized by opposition lawmakers as showing favoritism on election day.

“This is a very unwise intervention by the governor as voters go to the polls” in local balloting, said Labour Party lawmaker Andy Love, who also sits on Parliament’s Treasury Committee. “He is compromising his position by once again backing George Osborne’s economic plan.”

Speaking on BBC 4 radio today, King called Osborne’s budget cuts a “textbook response” to the financial crisis that struck “a perfectly sensible” balance. He also said there are signs of recovery after the economy entered a double-dip recession.

“If it had not been for the squeeze on real take-home pay being exacerbated by the rise in energy and food prices then I think we would have seen some growth,” said King.

King drew criticism from Labour in May 2010 for backing the coalition government’s “sensible” plans for the toughest austerity measures since World War II, suggesting proposals by Osborne’s Labour predecessor Alistair Darling didn’t go far enough.

The Conservative Party’s deputy chairman Michael Fallon, who sits on the same committee as Love, said King was right to reject calls from Labour’s Treasury spokesman Ed Balls to ease the pace of deficit reduction.

“The governor of the Bank of England is right. Ed Balls got the big judgment wrong when he was in government, and he’s got it wrong now,” Fallon said in statement.

Labour is likely to gain hundreds of the 4,800 local- council seats being contested across Britain today although it is not expected to unseat Conservative Boris Johnson as Mayor of London.

To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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