RTTNews - Governor of the Bank of England Mervyn King said Wednesday that it is necessary to produce a clear plan showing how prospective deficits would be reduced in the next Parliament.

In a speech at Mansion House, King said while taking extraordinary steps to stabilize banks and the wider economy, some of the past build up debt was shifted to the public from private sector. The application of temporary fiscal stimulus to counter the downturn last year was correct. But after five years, national debt as a proportion of national income is expected to be more than double its level seen before the crisis.

Most companies, especially smaller and medium sized enterprises rely heavily on bank finance. King stated, And with current market sentiment it may take further additions to equity capital before the banking system will be able to supply credit at a price and on a scale to finance a sustained recovery. That is likely to take time.

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