King cautious over further spending

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Giving evidence to the Commons Treasury Committee, Mr King warned that Chancellor Alistair Darling would have to be "cautious", given the state of the public finances.

His intervention came as Gordon Brown was setting out on a whirlwind diplomatic tour to rally support for a further co-ordinated "fiscal stimulus" at next month's G20 summit.

Downing Street said Mr King's comments were made in the context of the Bank's remit to meet the Government's 2% inflation target.

The Prime Minister's spokesman said: "We have been clear that we will do whatever it takes to see us through the global downturn and a crucial part of that is to ensure that we co-ordinate action globally.

"The Governor of the Bank of England has a remit to look overall at the UK economy, specifically related to meeting the inflation target of 2%, and it is in that regard that he was giving evidence ... to the select committee."

The spokesman pointed to an article by US President Barack Obama in which he called for "robust and sustained" action by countries around the world to stimulate their economies.

Mr King's intervention could hardly come at a more difficult time for Mr Brown, who addressed the European Parliament in Strasbourg, as he seeks to persuade other countries of the need to do more to lift the global economy out of recession.

It follows reported tensions between Mr Brown and Mr Darling over the need for a further stimulus in the UK - with the Chancellor said to be notably more cautious than the Prime Minister

In his evidence to the committee, Mr King warned that the Government needed to be wary of pushing the public finances further into the red in the wake of Mr Darling's original £20 billion stimulus package last November.