Former Bank of England governor claims Labour government not to blame for last financial crash

Mervyn King, formerly Bank of England governor from 2003 to 2013, was speaking on the BBC's Today Programme

Four years-plus of near-zero rates under Sir Mervyn King decimated an already fragile savings culture (PA)

The former Bank of England governor Mervyn King has denied that the previous Labour government was responsible for the last financial crash.

Mr King has previously alluded at select committee sessions that the Labour government allowed public spending to rise too fast – but his remarks while guest editing the BBC’s Today Programme this morning are the clearest exoneration yet of the party’s role in the financial crash of 2008.

“I am not going to talk about individual parties’ culpability because I think the real problem was a shared intellectual view right across the entire political spectrum and shared across the financial markets that things were going pretty well,” he said.

“There were imbalances – we knew things were unsustainable – but it was not entirely obvious where it would come unstuck – and I think that is something everyone shared, and the right thing is to make it better for the future.”

Mr King, who was governor of the Bank of England from 2003 to 2013, has apologised in the past for the actions of financial bodies and policy makers, in 2012 admitting: “We let it slip” and acknowledging people were “entitled to be angry” in an interview with the BBC.

“Looking back the leverage of banks was absurdly high and should have been lower,” he said today.

“I don’t think there is any point blaming them for it. It came as an enormous surprise to everyone that banks were not creditworthy.”

He cautioned there was still significant work to be done, confessing that he was unsure whether politicians had “yet got to the heart of what went wrong”. And added he was not yet sure the banking system was safe enough.