Mervyn King, Baron King of Lothbury

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Mervyn Allister King, Baron King of Lothbury, (born 30 March 1948) is a British economist and public servant who was Governor of the Bank of England from 2003 to 2013. Emeritus Professor of the London School of Economics and Chairman of the Philharmonia since 2020, Lord King serves as President of Marylebone Cricket Club for 2024/25.<ref>www.lords.org</ref>

Born in Buckinghamshire, King was educated at Wolverhampton Grammar School, Staffordshire, before going up to read economics at King's College, Cambridge, and Harvard University. Elected a Fellow of St John's College, Cambridge, working as a researcher on the Cambridge Growth Project he then taught at the University of Birmingham, Harvard and MIT, before becoming a Professor of economics at the London School of Economics. He joined the Bank of England in 1990 as a non-executive director, and became the chief economist in 1991. In 1998, he was promoted deputy governor of the Bank and a member of the Group of Thirty.

King was appointed as Governor of the Bank of England in 2003, succeeding Sir Eddie George. Most notably, he oversaw the Bank during the 2008 financial crisis and ensuing Great Recession. King retired from office as Governor in June 2013, being succeeded by Dr Mark Carney. Created a life peer in July 2013, Lord King entered the House of Lords as a crossbencher. From 2014 until 2022 he was professor of economics and law, a joint chair at New York University's Stern School of Business and School of Law.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Early life and career

Mervyn King is a son of Eric King, a railway porter who retrained as a geography teacher after the War, and Kathleen (née Passingham).<ref name="game"/><ref name="Interviews 12.03.2012">Template:Cite news</ref> Born at Chesham Bois in Buckinghamshire, he was educated at Warstones Junior School and Wolverhampton Grammar School in Staffordshire, before going up to read economics at King's College (graduating in 1969 with a first-class BA degree, proceeding MA in 1973) and St John's College, Cambridge, then (as Kennedy Scholar) at Harvard University.<ref name="bankbio">Bank of England profile Template:Webarchive; accessed 2 March 2011.</ref><ref>Template:Cite news</ref> Whilst at Cambridge, King was Treasurer of the Cambridge University Liberal Club in 1968.<ref name="bankbio"/><ref>Profile, keynessociety.wordpress.com; accessed 30- March 2015.</ref> While at Harvard, King's academic advisor and mentor was American economist Martin Feldstein whom he describes as "a very important influence."<ref name=":0">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Elected a Fellow of St John's College in 1972, he worked as a researcher on the Cambridge Growth Project with future Nobel Laureate Sir Richard Stone and Terry Barker at the University of Cambridge. From 1977 until 1984, he taught at the University of Birmingham and was a Visiting Professor at Harvard then Massachusetts Institute of Technology (MIT) where he shared an office with then-Assistant Professor Ben Bernanke. King says that while at Birmingham, he was influenced by the Austrian School of Economics.<ref name=":0" /> In October 1984 he was appointed Professor of Economics at the London School of Economics where he founded the Financial Markets Group.<ref name="bankbio"/> In 1981, he was one of the 364 university economists who signed a letter to The Times condemning Chancellor Geoffrey Howe's 1981 Budget.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref><ref name="BBC 13.03.2006">Template:Cite news</ref><ref name="Times 07.02.2012">Template:Cite news</ref>

Bank of England

King joined the Bank in March 1991 as chief economist and executive director, after being a non-executive director from 1990 to 1991. He was appointed Deputy Governor in 1997, taking post on 1 June 1998. In the same year, King became a member of the Group of Thirty. An ex-officio member of the Bank's interest-rate setting Monetary Policy Committee since its inception in 1997, King took part in its monthly meetings. Succeeding Sir Eddie George as Governor on 1 July 2003, he became the first incumbent Governor of the Bank of England to receive an audience with Queen Elizabeth II.<ref>Template:Cite news</ref>

While Governor, King was responsible for putting Matthew Boulton and James Watt on the £50 note, Adam Smith on the £20 note, and Winston Churchill on the £5 note.<ref>Template:Cite news</ref><ref name=":0" />

2008 financial crisis

After becoming governor, King explained that Bank of England policy was "similar to that of the Federal Reserve" under Alan Greenspan. Greenspan described his approach as "mitigat[ing] the fallout [from the bursting of a bubble] when it occurs".<ref name="king_2004">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> King agreed with Alan Greenspan that, "It is hard to identify asset price 'bubbles'."<ref name="king_2004"/>

Other warnings about the UK housing market followed, including from the National Institute of Economic and Social Research in 2004<ref>Template:Cite journal</ref> and the OECD in 2005.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> King noted the "unusually large" difference between the RPIX and CPI at the beginning of 2004 (the latter does not include house prices as part of its inflation measure, whilst the former does),<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> and, six months later, that UK house prices had risen "to levels which are well above what most people would regard as sustainable in the longer term", having increased by more than 20% over the preceding year and more than 100% over the preceding five.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

In 2005, The Economist described the run-up in UK house prices as forming part of "the biggest bubble in history",<ref>Template:Cite news</ref> and, by October 2007—when the UK housing bubble was at its peak<ref>Template:Cite book</ref> — the IMF was reporting that the UK housing market was "overpriced by up to 40 per cent".<ref>Template:Cite news</ref> As noted by the OECD, house-price volatility "can raise systemic risks as the banking and mortgage sectors are vulnerable to fluctuations in house prices due to their exposure to the housing market."<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

Dean Baker in The American Prospect said the failure by Greenspan and King to tackle their respective countries' housing market bubbles resulted in catastrophic "fallout" when the bubbles burst, resulting in both countries' worst recessions since the Great Depression.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> UK–US inaction may be compared to action taken by China<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref><ref name="FT 18.11.2011">Template:Cite news</ref><ref>Template:Cite news</ref><ref name="FT 28.12.2011">Template:Cite news</ref><ref>Template:Cite news.</ref> and Australia.<ref name="OzQuote">Template:Cite news</ref>

Another result of the financial crisis was King's rejection of the Bank's devout focus on price stability, or inflation targeting, a policy that was instituted after Black Wednesday in 1992 and continued by King after becoming Governor in 2003.<ref>Template:Cite book</ref> One of the two early lessons King drew from crisis were that "price stability does not guarantee stability of the economy as a whole" and that "the instruments used to pursue financial stability are in need of sharpening and refining."<ref name="King speech394">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

The 2012 Financial Services Bill, in transferring the majority of macroprudential regulatory powers from the FSA to the Bank, granted the Financial Policy Committee (chaired by the Governor) the power to curb lending in booms, including placing limits on the public's access to mortgages.<ref name="Indie 23.01.2012">Template:Cite news</ref> A former senior BoE official summed up the Bank's pre-crisis performance: "How can you look back with the benefit of hindsight and see it as a success? We were responsible for financial stability and we utterly failed to take any avoiding action against the greatest financial crisis in our lifetimes".<ref name="Interviews 12.03.2012"/> David Blanchflower said that, even as late as the summer of 2008, King did not even see the financial crisis coming.<ref name="DaBl 18Apr2012">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

In its review of Bank of England accountability, one of the major complaints of the Treasury Select Committee was the Bank's refusal to undertake an internal review of its performance during the financial crisis.<ref name="FT 23.01.2012a">Template:Cite news</ref> Such a review would pose difficulties since evidence on how its most senior policymakers arrived at their decisions was destroyed as a matter of course.<ref name="FT 23.01.2012a"/> By contrast, the United States publishes the Federal Reserve's deliberations with a five-year lag, which have provided "the most detailed picture yet of how top officials at the central bank didn't anticipate the storm about to hit the U.S. economy and the global financial system."<ref name="WSJ 13.01.2012">Template:Cite news</ref> As in the UK, the US central bank's failure led to a new regulatory framework, the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act.<ref name="WSJ 13.01.2012"/>

Response to crisis

King argued that when the financial crisis and bank meltdown hit in autumn 2008, he and other Western central bankers "prevented a Great Depression", in part by cutting interest rates to virtually zero. The Economist agreed, saying that he "has a point".<ref name="Economist 10.12.2011">Template:Cite news</ref> A 2012 review of actions taken by Western central banks in the face of the crisis also supported King's claim.<ref>Template:Cite journal</ref> The bank has faced criticism, however, for the pace of the rate cuts, which took five months from the beginning of October 2008 to get down from 5.0% to 0.5%, where they remained for several years.<ref name="Guardian 03.02.2012">Template:Cite news</ref><ref name="rate_history">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

After becoming only the second Bank of England Governor to speak to the TUC in its 142-year history, King conceded that people were "entitled to be angry" about unemployment and the bank bailout.<ref name="BBC 15.09.2010">Template:Cite news</ref>

King has been scathing about the banking sector since it crashed, especially its "breathtaking" £1 trillion bailout and its continuation of bonus awards in 2009, calling for a serious review of banking's structure and regulation.<ref name="Guardian 21.10.2009">Template:Cite news</ref>

In a Daily Telegraph interview in March 2011, King said banks had "put profits before people", that failure to reform the sector could result in another financial crisis, and that traditional manufacturing industries have a more "moral" way of operating.<ref name="Interview 05.03.2011">Template:Cite news</ref> In an interview with The Times in March 2012, he said that the banks are still in denial about the "very real and wholly understandable" anger that is felt at their behaviour,<ref name="Denial 12.03.2012">Template:Cite news</ref> Bankers have not been happy with his excoriating views and insistence on avoiding moral hazard, but King insists that "[m]arket discipline can't apply to everyone except banks", pinpointing the banks' sense of grievance on their finding it "very, very difficult to face up to the failure of their banking model".<ref name="Denial 12.03.2012"/>

Before the end of King's governorship in 2013, some top UK banks warned that unless a less "hostile" figure were found as a successor, they could move abroad.<ref name="Times 14.03.2012">Template:Cite news</ref><ref name="IndiePA 21.02.2012">Template:Cite news</ref> On 26 November 2012, Mark Carney was named as King's successor.

Banks bailout

King was accused of refusing funding to the Northern Rock Bank, precipitating a run on that bank, a situation not seen in the UK since 1914.<ref name="NS 03.10.2011">Template:Cite journal.</ref> King later said that it had been the Chancellor Alistair Darling, not he, who had the final word on refusing the necessary help to Northern Rock.<ref name="Guard 06.11.2007">Template:Cite news</ref> In his review Template:Dead link Template:Cbignore of King's tenure as Governor, Times journalist David Wighton wrote:<templatestyles src="Template:Blockquote/styles.css" />

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In his memoirs, Alistair Darling was critical of King for emphasising moral hazard—the doctrine of not saving the banks from the consequences of their own mistakes—instead of rescuing the banks by pumping money into them as the banking-system meltdown occurred in autumn 2008.<ref name="STimes 04.09.2011">Template:Cite news</ref> Despite his refusal to give funding to the retail banks, he retained his job, and submitted in defence to a Treasury Select Committee (New York Times/Financial Times, 20 September 2007) that his actions were on the basis that the Bank of England was the "lender of last resort" but subsequently supported moves to provide funding to those banks which had been nationalised or partly nationalised.Template:Citation needed

Political interventions

King's highly-critical Mansion House Speech in 2009 allegedly helped to bolster the Conservatives in the run-up to the general election. King called for the break-up of the country's biggest banks, as well as arguing that, unless the Bank were given more active, interventionist powers to ensure financial stability, it would be like a church: able to "do no more than issue sermons or organise burials."<ref name="King speech394"/><ref name="Times 14.03.2012"/> King later advised a rebalancing of the economy, increased saving, and an "elimination of the structural deficit".<ref name="Guardian 21.10.2009"/> In November 2009, he told MPs that the then Labour government's intention of halving the deficit over the next five years was insufficient.<ref name="ft_9-11-11">Template:Cite news</ref> In May 2010, just days after the Coalition government was formed,<ref name="ft_14-05-11">Template:Cite news</ref> King said he had spoken to Chancellor George Osborne and supported his plans to cut spending by a further £6 billion within the 2010–11 fiscal year.<ref name="ft_9-11-11"/> The Liberal Democrats did not need to be talked around to agreeing to the severity of the cuts.<ref name="ft_blog1">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

In November 2010, it was revealed that some senior staff at the Bank of England (one of them was David Blanchflower)<ref name="DaBl 18Apr2012" /> were uncomfortable with King's endorsement of the government's public spending cuts, accusing him of overstepping the boundary between monetary and fiscal policy. King's support for the government's cuts was in spite of concerns within the bank that cutting spending so rapidly could derail the UK's nascent economic-recovery.<ref name="ft_9-11-11" /> These revelations led to accusations of King being a "coalition courtier"<ref>Template:Cite news</ref> and of making "excessively political"<ref>Template:Cite news</ref> interventions with regard to UK economic policy.<ref name="ft_blog1" />

The accusations were given greater weight after the December 2010 WikiLeaks Cablegate.<ref>Template:Cite news</ref><ref>Template:Cite news</ref> As a result of the WikiLeaks disclosures and David Laws' account of the Tory-Lib-Dem coalition-talks, King was asked by the Political and Constitutional Reform Select Committee to explain why he was seemingly cited in the talks as backing Tory plans to introduce spending cuts this year.<ref>Template:Cite news</ref> King insisted to the committee that "at no stage did I offer any advice on the composition of any measures designed to reduce the government deficit";<ref>Template:Cite book</ref> the committee implicitly accepted King's explanation of events as he is not even mentioned, let alone criticised, in their final report.<ref>Template:Cite book</ref>

According to George Osborne, Gus O'Donnell made an offer to have King brief the Tories and Lib Dems during the Coalition's formative talks; however, the parties suspected they "knew what he was going to say and . . . also thought it was more appropriate for our Treasury spokesmen to talk to him".<ref>{{#invoke:citation/CS1|citation |CitationClass=web }} See Q20 and Q21 plus answers.</ref>

King was criticised again in May 2012 on BBC Radio 4's Today programme, on the day before an election, after he expressed approval of Coalition austerity measures.<ref>Template:Cite news</ref>

In a speech to the European Parliament in Brussels in May 2011, King commented that the Bank of England was more concerned with the broader stability of the economy and banking sector than with inflation figures: "The economic consequences of high-level indebtedness now would become more severe if rates were to rise. It is the main reason why interest rates are so low."<ref name="Tele 03.05.2011">Template:Cite news</ref> With regard to Project Merlin, King was critical of Chancellor Osborne's misleading figures, and correctly predicted in a "light plausibility check" that Merlin would be a failure.<ref>Template:Cite news</ref> In March 2009, King said any plan for a second fiscal stimulus by the UK Government had to be done with caution.<ref>BEO Governor: "No More Stimulus", optionarmageddon.ml-implode.com; accessed 30 March 2015.</ref>

His Mansion House Speech in June 2009 criticised Chancellor Alistair Darling for resisting significant changes to the allocation of regulatory responsibilities between the FSA, the Treasury and the Bank, which would have given the BoE greater power to fulfil its role of ensuring economic stability.<ref>For King's previous position see {{#invoke:citation/CS1|citation |CitationClass=web }}</ref><ref>Template:Cite news</ref><ref>Template:Cite news</ref>

In January 2012, King received a letter from the Government's former chief scientific adviser Sir David King, Zac Goldsmith, former environment minister John Gummer (and 17 others) warning of the possibility of a carbon bubble.<ref name="Guardian 19.01.2012">Template:Cite news</ref> King agreed to an evaluation of the matter.<ref name="CalLea 06Feb2012">Template:Cite news</ref>

The BoE's Financial Policy Committee, established to identify emerging bubbles in the financial system, agreed in March 2012 to ask Parliament for new policy tools to be used to prevent another financial crisis. King said that the FPC narrowed its choice of instruments to three—the power to ensure banks have countercyclical capital buffers, the ability to force banks to hold more capital against exposure to specific sectors judged risky, and the power to set leverage ratios—because it will be important to explain to parliament and the wider public why it is or is not using them.<ref name="RBla 25Mar2012">Template:Cite news</ref>

Late March 2019, he argued that the UK should leave without a deal in the wake of the UK's decision to leave the European Union, arguing that the economic consequences would be limited, and that the UK was well-prepared after six months of preparations.<ref>Template:Cite news</ref>

Personal life

King's wife, Barbara Melander, is a Finnish interior designer and comes from the Swedish-speaking minority in Finland. They married in a private ceremony at a church in Helsinki in 2007.<ref name="game">Template:Cite news</ref> Lord King's favourite band is ABBA.<ref name=":0" />

A fan of Aston Villa F.C., King once arranged a game between Bank of England employees and ex-Villa players.<ref>Template:Cite news</ref> He served on Villa's board of directors from February until April 2016, and then he, along with fellow board member former Football Association chairman David Bernstein, resigned in protest against owner Randy Lerner's stewardship of the club.<ref>"David Bernstein and Lord King resign from Aston Villa board", BBC Sport, 18 April 2016.</ref> In January 2024, King was named by Aston Villa as a member of the Honorary Anniversary Board ahead of the AVFC's 150th anniversary season.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

File:Marylebone Cricket Club Logo.jpg

King briefly found himself commentating on an Ashes Test Match for BBC Radio's Test Match Special in 2005, while being interviewed by Simon Mayo. President of the cricket foundation Chance to Shine programme, which fosters competitive cricket in state schools, Lord King is a member of the AELTC and MCC. In 2015, he became President of Worcestershire County Cricket Club<ref>Template:Cite news</ref> and in May 2024, it was announced he would serve as President of the MCC from 1 October 2024 for a 12-month term.<ref>Template:Cite news</ref>

Awarded an Honorary Doctorate of Laws (Hon LLD) by Cambridge University in 2006, King also received an Honorary Doctorate of Literature (Hon DLitt) from Abertay University in July 2013.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> King has also been elected a Visiting Fellow of Nuffield College, Oxford.<ref>Nuffield College, Oxford website Template:Webarchive; accessed 30 March 2015.</ref>

In 2015, King was listed as the 11th most influential person in the Financial Centres International top 500.<ref>King listed as eleventh most influential person in the Financial Centres International top 500 Template:Webarchive, stikeman.com; accessed 30 March 2015.</ref>

Honours and arms

Honours

Appointed a Knight Grand Cross of the Order of the British Empire (GBE) in the 2011 Birthday Honours,<ref>Template:London Gazette</ref><ref>Template:Cite news</ref> Lord King was advanced as a Knight of the Garter on 23 April 2014.<ref>Template:London Gazette</ref><ref name=":0" />

On 19 July 2013, King was created a Life Peer by Queen Elizabeth II for 'contributions to public service'. Lord King entered the House of Lords on 22 July 2013 as a crossbencher, taking the title Baron King of Lothbury, of Lothbury in the City of London.<ref name="parliament">{{#invoke:citation/CS1|citation |CitationClass=web }}</ref><ref>Template:London Gazette</ref>

On 6 January 2016, King was commissioned a Deputy Lieutenant for Kent by the Lord Lieutenant, Viscount de L'Isle.<ref>Template:London Gazette</ref>

Coat of arms

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Books

King's books include:

The British Tax System, (1979, and four subsequent editions), with John Kay.
The End of Alchemy: Money, Banking and the Future of the Global Economy, (2016).
Radical Uncertainty: Decision-making for an unknowable future, (2020), with John Kay.<ref name="Radical Uncertainty: Decision-Making Beyond Numbers">{{#invoke:citation/CS1|citation

|CitationClass=web }}</ref>

References

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External links

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Mervyn King, Baron King of Lothbury

Contents

Early life and career

Bank of England

2008 financial crisis

Response to crisis

Banks bailout

Political interventions

Personal life

Honours and arms

Honours

Coat of arms

Books

References

External links

Navigation menu

Mervyn King, Baron King of Lothbury

Early life and career

Bank of England

2008 financial crisis

Response to crisis

Banks bailout

Political interventions

Personal life

Honours and arms

Honours

Coat of arms

Books

References

External links

Navigation menu

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