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Gov't urged to reduce public deficit

General News |  21/01/2010
Gov't urged to reduce public deficitThe government must act to reduce the public deficit, the governor of the Bank of England has claimed.

Mervyn King told an audience at the University of Exeter that businesses and consumers may need to be "patient" as the health of the nation's finances are restored.

This process could potentially take several years, he suggested.

Mr King was commenting after official figures revealed that inflation is rising at a quicker than expected rate in the UK.

Consumer Price Index inflation rose a whole percentage point to 2.9 per cent last month, partially driven by the return of the VAT rate to 17.5 per cent.

He said it was likely that inflation will rise to over three per cent in the coming months before being brought back towards the government's target measure of two per cent, but added that consumers should not panic.

"The economic message from the crisis is clear - low-saving countries will reduce their net borrowing from abroad," Mr King added.

Posted by Stephen Wilkinson


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