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September 15, 2010    

Bank Governor prepared for questions from union leaders

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by Kay Murchie

Bank of England governor Mervyn King will today prepare himself for questions from union leaders over Government spending cuts.

Mr King becomes only the second governor in history to address the Trades Union Congress (TUC).

Earlier this week, it was revealed that the tough austerity measures introduced by the coalition Government are set to lead to industrial action following the TUC gathering.

At the annual TUC meeting, union leaders urged delegates to “stand up and fight” against the massive spending cuts.

The motion was supported by an overwhelming majority of delegates and the TUC has said strikes were “inevitable” unless the Government is prepared to change direction.

Support was received from three of Britain’s biggest unions – Unite, UNISON and the GMB. Together these unions represent approximately 4 million workers.

Today, Mr King is expected to answer tough questions from congress delegates in Manchester, but he has said he will not be an “apologist” for the City.

Sixty-two-year-old King is also expected to field questions about bankers’ bonuses and tax evasion.

In an interview published in the conference guide, Mr King has said he sympathises with public outrage about the financial crisis.

He said: “The origins of previous recessions could be traced to the need to combat inflation. This involved high interest rates, which inevitably affected businesses and jobs.

“But we have had the restructuring of industry, labour markets are more flexible and inflation is not the problem it was. People have a right to be puzzled.

“The unions have made concessions during previous recessions, so why should they suffer now? The role of the Bank of England changed with independence. It was an apologist for the City. I now see it serving the nation as a whole.”

Meanwhile, the coalition Government has faced much criticism for quickly introducing such tough measures to deal with the UK’s budget deficit but it has deemed them necessary in order to save Britain from the problems which debt-stricken Greece faces.

Many experts have warned that cutting the deficit too quickly could pose a threat to the fragile recovery, because spending cuts and a hike in taxes will have slashed the forecast for growth, which therefore increases the possibility of a double dip recession.

Similar measures introduced by the euro zone nations have led to many strikes this year. In particular, Greece’s tough measures have met with strong opposition from unions.

Greece’s two main unions have launched several strikes this year but some of the protests have been violent.

In May, a strike resulted in three deaths in Athens after protesters set fire to a bank.

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