Paul Tucker, deputy governor of the Bank of England, has flatly denied suggestions that ministers in the last Labour government urged him to encourage banks to manipulate interbank lending rates at the height of the financial crisis.
Mr Tucker’s trenchant comments to a parliamentary committee yesterday contradicted claims by George Osborne, chancellor of the exchequer, who had accused Labour of condoning the Libor manipulation during the 2008 crash. Asked by MPs on the Treasury select committee whether he had been urged to reduce Libor – a measure of the rate at which banks lend to one another, and an indicator of their financial health – by Labour ministers, Mr Tucker said: “Absolutely not.”
Quick to respond, Ed Balls, Labour’s shadow chancellor, said: “It is now absolutely clear that the chancellor’s allegations last week were totally false. George Osborne should now publicly withdraw these false allegations and apologise.”