Mervyn King: UK's Economic Recovery Hinges on Eurozone Crisis
Baku, September 21 (AZERTAC). The recovery of the UK economy depends on the future of the eurozone and the handling of the eurozone crisis, according to Bank of England (BoE) governor Sir Mervyn King.
Casting doubts on the ability of eurozone policy makers to keep the single currency union intact, King said the eurozone crisis was hanging over the UK like a "black cloud of uncertainty".
He added: "What [recovery] will depend on critically, I think, is what happens in the euro area and also the rest of the world.
"(Policymakers) have persisted with trying to keep all the countries in the eurozone ... and tried very hard to keep the show on the road. But I don't think there's any guarantee that they will be able to do that."
King said resolving the eurozone crisis is important for the UK economy as 50 percent of Britain's exports still go to the euro area.
Contrary to the BoE's initial predictions that the economy would grow by five percent by the end of 2012, the UK has entered its second recession in three years.
He also stressed the need for banking reforms to avoid future crises: "We're beginning to see a few signs now of a slow recovery, but it will be a slow recovery. After a banking crisis one can't expect to get back to normal and I fear it will take a long time."
BoE has already injected Ј325bn into the economy and is midway through a four-month asset purchase program that will add Ј50bn.
Though King did not mention the extension of the asset purchase program, the Monetary Policy Committee (MPC) is expected to approve another Ј50bn in November considering less than encouraging growth figures from the manufacturing and construction sectors, taking the total value of the asset purchase program to Ј425bn.
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