The outgoing Governor of the Bank of England, Sir Mervyn King, has told ITV News that no major change is needed to the Bank's inflation remit when he is succeeded by Mark Carney.
He also describes the financial pressures placed on households and small businesses during periods of high inflation.
The Bank of England's remit should not change to include anything other than the 2% target of inflation, the outgoing Governor Sir Mervyn King has told ITV News.
In the second of two exclusive interviews with Sir Mervyn, he said: "I'm not sure that there is any call for a major change in the remit."
He added: "What‘s most important is that we commit ourselves again to a very clear target for inflation of 2%."
The outgoing Governor of the Bank of England, Sir Mervyn King has said "there's no point pretending we can go back to the pattern of demand we saw in 2006-2007".
He told ITV News' Economics Editor, Richard Edgar:
We need a big shift of resources towards exports, towards manufacturing and business investment. The consequence of that is we have to accept that private consumption and public spending will not grow as rapidly.
We will get back to the level of unemployment and the path of output, we won't get back to the pattern in which we had a big trade deficit, consumption was high and exports were relatively weak.
That balance has to be changed. Policies are in place to achieve it. We are on track to achieve it. Recovery is in sight.
We're only a week away from the Budget and traditionally the Governor doesn't ever comment on Government policy but he revealed that had spoken in the past few days to the Chancellor and Prime Minister.
I asked if he had once again raised supply side measures, things that the Government can do to make the economy more competitive.
I've have had conversations with the Chancellor and Prime Minister about the strategy and we talked privately about various things that can be done. It is not my job, and it would be quite wrong of me to speak in public about things that is their responsibility.
But I am confident that there are things the UK could do and I'm very confident the Government understands that.
I think that ratchets up the pressure on the Chancellor a little bit.
Back here in the West Midlands, the main message is that business is tough but there is growth and it's abroad.
The Governor of the Bank of England is only a few months away from retiring but he's showing no loss of appetite for these regional visits, trips to companies like this one in the Midlands, where he can find out what is going on in the real economy on the ground.
He's been talking to two manufacturers both of which export, both of which are doing rather well and that's given him some grounds for optimism.
When asked why a rebalancing of the UK economy is not happening at a faster pace, Governor of the Bank of England, Sir Mervyn King told ITV News:
It's because we're in a process that will take a number of years to move to a position with lower spending on consumption and public spending and higher exports or producing things as a substitute for imports. That will require more business investment.
Two things are holding us back at the present.
One is the extraordinary degree of weakness in the euro area. It's in recession, it's our single biggest trading partner. The economies in or close to the area really affect about half of our economy.
The second factor is "the enormous uncertainty generated by what is happening in the euro area is encouraging firms to hold back on investment", he added.
In an interview with ITV News' Economics Editor Richard Edgar, Bank of England Governor, Sir Mervyn King, said a recovery for the UK economy was "in sight".
During a two day visit to Birmingham, Governor of the Bank of England, Sir Mervyn King, spoke to ITV News about lessons he had learnt from talking to company bosses and factory workers.
What I've learnt today is that demand for UK manufactured exports is pretty buoyant, and that the new position we're in, the UK has to rebalance its economy.
We have to rely more on exports that we did, this is going to correct our trade deficit and gradually lead us back to full employment.