Darling 'may strip Bank of powers'

12 April 2012

Chancellor Alistair Darling could strip the Bank of England of key powers amid a public spat with governor Mervyn King, it has been reported.

The Financial Services Authority (FSA) is reportedly set to be given responsibility for maintaining "financial stability" as part of regulation reforms.

The news emerged as shadow chancellor George Osborne dismissed "ridiculous" claims that he was too close to Mr King and privileged information had been leaked to him.

Mr Osborne also suggested that Gordon Brown had been personally briefing against the governor.

"These are allegations that are simply not true," he said. "They are made by Labour Cabinet ministers, sometimes by the Prime Minister in private to people.

"I think it seems more about the political situation of the Government than frankly the entirely proper and correct relations between the Opposition and the independent central bank."

Mr King embarrassed the Government this week by telling MPs he wanted to see tougher action to cut "extraordinary" levels of borrowing.

He also warned that prospects for economic recovery were "more uncertain than ever", despite increasingly optimistic statements from ministers.

Earlier this month, at an extraordinary Mansion House dinner, the Chancellor and the governor set out markedly different positions on regulation and the handling of public debt.

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