King’s Speech Warns of Further Financial Threats

Sir Mervyn King's Speech as Chairman of the Financial Policy Committee

Sir Mervyn King’s half yearly assessment of the state of the economy followed a whole string of economic speeches this week. And it, in turn, was followed today by more economic speeches from Mario Draghi of the European Central Bank and President Sarkozy.

But speeches only go so far. It was the great speech writer Peggy Noonan who said:

Speeches are not magic and there is no great speech without great policy.

Now the Governor of the Bank of England is, in no small way, responsible for a policy of Bank regulation. So when the Governor makes suggestions and recommendations we must presume the hint of policy.

The Governor’s speech was made in his capacity of chairman of the financial policy committe created last year by the Government.

The speech itself was softly-spoken and given whilst sitting down. That made for a less imposing stature than we might have expected from the speaker.

These speeches aren’t meant to rally the faithful, but they should suggest calm confidence and capability. A sedentary presentation makes that hard to deliver.

His speech was peppered with grim sounding images and metaphors. We heard of an…

exceptionally threatening environment

and,

 Systemic crisis

and,

It’s not a single event and none of us really know,

This wasn’t an upbeat speech. The Governor made clear that the banks need to prepare for the worst and that the Bank of England is preparing for every scenario. But, somehow the sense of calm confidence and capability was missing from this speech.