Britain's economy should start growing again this year, though the recovery from recession is likely to be slow, the Bank of England's governor said Thursday a day after he conceded that the central bank should have done more to rein in bank excesses in the run-up to the financial crisis.
Though Britain is back in recession after two consecutive quarters of negative growth, there has been some positive survey data lately that may point to a recovery ahead despite high energy and commodity costs, King said.
"There are indeed signs of a recovery coming and we see that in the business surveys and I think also in the employment data," Mervyn King, the Bank's governor, said in a BBC radio interview. "So I think a reasonable view would be that we would start to see steady, slow recovery coming during the course of the year."
King said the government's strategy of reducing deficits, accepting a fall in the value of sterling and rebalancing was "an absolutely textbook response" to the crisis, which forced taxpayers to bail out two major banks and drove the country into a deep, 18-month recession that ended in the last quarter of 2009.
"If it had not been for the squeeze on real take-home pay being exacerbated by the rise in energy and food prices then I think we would have seen some growth," King said.
King spoke to the BBC the morning after giving a speech in which he said the Bank should have done more to warn of the dangers before the crisis hit.
"We didn't imagine the scale of the disaster that would occur when the risks crystallized," King said in the speech. "With the benefit of hindsight, we should have shouted from the rooftops that a system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much, and that so-called light-touch regulation hadn't prevented any of this."
He followed up those remarks Thursday with the admission that the Bank was "certainly late to the game in understanding the scale of the fragilities in the banking system, and the potential consequences when those risks materialized."
Nonetheless, King said, no single agency or institution could be blamed for the crisis.
"This was not the fault of a few bankers, a few politicians or even a few central banks," King said. "This was the failure of a system. And I accept our share of responsibility in going along with a system of banking that failed."