Bank of England cannot stop housing slump

The Bank of England is powerless to stop the building slump, its governor has said.

Mervyn King said there was little the Bank could do to prevent a housing crash if that is what the market demanded.

He said the Bank could not provide funding to finance investment and that money had to come from mobilising savings in the economy, reported the Independent.

“Funding is not something the central bank can supply…It would be a very dangerous move to move to a situation where the government saw its major role as guarantee lending,” he said.

“Why should the taxpayer take on the risk of borrowing by individual borrowers, some of whom are risky?”

His comments came amid speculation that a stamp duty “holiday” is being considered by government to stimulate the housing market, along with proposals to extend the Bank of England’s special liquidity scheme.