Mervyn King’s testimony yesterday was shocking, he made public that the Bank of England was not consulted on Alistair Darling’s plans for the reform of banking regulation.  Call Guido old fashioned, but he somehow thinks that it might be a tad useful if the former student Trotskyite turned Chancellor, Alastair Darling, consulted the professor of economics turned career central banker, Mervyn King.  This is not mere student politics, this is the trillion dollar question of the moment.  Mervyn confirmed that the current tri-partite regulatory regime designed by Balls and Brown “was a mess”.

As if that wasn’t bad enough figures released yesterday showed that Britain has the biggest budget deficit in the world.  The best placed economy to weather the global crisis (© G. Brown) had government borrowing hit £20 billion in May, which means the government is overspending by nearly £30 million an hour. Gordon is spending way beyond our means and putting our children into debt at an unheard of rate.  He actually boasts that he is going to spend, spend, spend…

Mervyn basically testified yesterday that the government needed to cut spending much more dramatically than it is planning to do or else we will be ruined.  If Gordon is hoping for a recovery (as Alastair officially predicts) to save him in time for a general election the news from the OECD will not be encouraging.  The OECD said yesterday that Britain is in “severe recession” and that it was downgrading it’s expectations for the UK economy, predicting it will shrink by 4.3% this year…