Speaking to the Treasury Select Committee yesterday, Mr King suggested that had Gordon Brown not run up so much debt when he was Chancellor, the treasury would be able to do more now to pull the economy out of recession.

“We entered this crisis with levels of public borrowing which were too high and that made it difficult,” he said.

Mr King also implied that the UK’s troubled banking system could still need yet more money from the Government, despite already having received billions of pounds in taxpayer cash.

He said that the Government needs to take its time to understand fully what really is on the balance sheets of our major banks, and then be prepared to help them out further if they need it.

“It is important that the Government underpins the balance sheet of the major banks and it’s made quite clear that it will do that,” he explained, suggesting that even more toxic assets could be dumped onto the exchequer if banks find themselves in hot water.

“It can do that in a variety of ways,” he continued. “One is by injecting capital directly the other is by providing insurance for a fee against a certain group of assets and the third is just by being willing in the end to ensure that if a bank finds itself in a position where its level of capital threatens to fall below the absolute minimum then the Government will step in.”

The Governor then said there was no way of knowing how much the entire crisis is going to cost the taxpayer.

“How much capital the banks will need in the end is impossible to tell,” he said, “because in large part it will reflect developments in the world and our own economy that are impossible to predict with any precision.”

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