More Blank Cheques

It just gets more surreal as the days go by, more and more blank cheques signed by the taxpayer.

Mervyn King told the Treasury Select Committee it would take "many months" to establish the scale of toxic assets held by banks. "How much capital banks will need in the end is impossible to tell," he added. His comments came after the Treasury announced it would insure £325bn of toxic assets from RBS, while pumping an extra £13bn into the loss-making bank.

Mr King acknowledged the UK public debt was "too high" when entering the recession but dismissed as "wild exaggeration" any suggestion that the country was going bust because of the bank bail-out.

The opposition have latched on to the admission the Government's high level of borrowing had limited its options in responding to the financial crisis.

"In a refreshingly candid statement, the Governor of the Bank of England has confirmed what we've always said - that Gordon Brown borrowed too much in the boom and left Britain badly prepared for the recession.

"Everyone is now pointing to the mistakes made in Labour's age of irresponsibility except the man who made most of them - Gordon Brown."

On a more positive note, Mr King stressed that Britain would emerge from the recession, saying: "There have been downturns and financial crises in the past. It won't go on for ever. It will be painful but we will come through it."

As Wendy would say ONIONS!