Bank of England Governor Sir Mervyn King faces MPs on UK economy: live

10.05 Lord Turner: "The conversation I had with Barclays was about the position of Bob Diamond, the brand of Bob Diamond."

Andrew Tyrie: "Was there scope to misunderstand what you were saying?"

Turner: "No. I have no doubt that we had conversation on whether Bob Diamond was the man to lead the change needed [at Barclays]. I thought the most likely result was that Bob Diamond would resign. But I did not think it was the most sensible thing to do... We did not give them a direction [on Libor] but told the board they have to think about it."

09.58 Mark Kleinman at Sky:

09.57 Lucy Manning:

09.54 Lucy Manning at ITV has said that Sir Mervyn and Paul Tucker will be asked about an email MPs believe show the Bank of England's effort to get banks to lower Libor:

09.47 Sir Mervyn will start taking questions from MPs at 10am. We'll have the latest here.

09.31 BREAKING NEWS...

UK inflation falls to 2.4pc in June, down 0.4pc. Beats estimates of 2.8pc and inflation is now at its lowest level since December 2009. Fall helped by clothing and footwear. Visit our Debt Crisis Live Blog for more.

09.25 In February Sir Mervyn lost his cool with MPs after being quizzed at the Treasury Select Committee. Andy Love, a Labour MP, accused the Governor of being “relaxed” about the current economic situation. Sir Mervyn hit back:

I’ve consistently and publicly been dissatisfied with what has been done. I said to the previous government that the scale of the recapitalisation of the banks was inadequate and their actions in making sure banks lend to SMEs was also inadequate. I made that very clear.

In terms of asking banks to put together pieces of paper that are claims on SME loans, I will tell you exactly what would happen. The pieces of paper given to us [taxpayers] would be the worst of the loans, not the good ones. And I’ll tell you why. Because in discussing with the present Government a scheme to lend to SMEs, the banks were unhappy about the idea of a scheme in which the Government would participate in all SME lending.

Why? Because they didn’t want to share the fruits of the most profitable loans to small businesses. We’d [the taxpayer again] end up being left with the bad ones. That’s why we’ve [the Bank] been very clear on this with Government.

I’m not relaxed about it at all. I’m the person who put forward proposals for how this might be done. They are not proposals that banks find in favour. I’m disappointed that the government you supported before [Labour] was unwilling to take on the banks on this issue.

They negotiated with the banks, and if the banks didn’t like it, that was what came out. That doesn’t seem to be a very strong public policy. So, I’m far from relaxed or complacent, Mr Love. I am actually rather concerned about it. I want to see something that makes sense economically, not something which is just a gesture.

Unless there’s an element that tries to prevent the banks picking and choosing which SME loans they share with Government, and which not, there is a risk of adverse selection and taxpayer gets a bad deal.”

09.15 The Governor is also facing calls to step down from his post. David Blanchflower, who served on the MPC from 2006 to 2009, told the Huffington Post:

People told him about the Libor issue and he just wasn't interested. He didn't share any of the information with the rest of us on the Monetary Policy Committee.

09.07 Sir Mervyn's appearance comes a day after the International Monetary Fund slashed its UK growth forecast to just 0.2pc for 2012 and 1.4pc for 2013 and less than a week after the announcement of an emergency £80bn "funding for lending" scheme designed to ward off a credit squeeze.

09.04 The Bank of England Governor will face a grilling from MPs from 10am today on his efforts to nurse the British economy out of a double-dip recession.

Sir Mervyn will appear before the committee alongside deputy Paul Tucker, who is widely tipped to succeed him next year if he emerges from investigations into the Libor scandal with his reputation unscathed. Also present are Lord Turner and Donald Kohn, members of the interim Financial Policy Committee, and Paul Fisher, executive director of markets at the Bank of England.

Sir Mervyn is also likely to face further questions about his handling of the Libor rate-fixing scandal, after it emerged that the then president of the US Federal Reserve Tim Geithner raised concerns with him about the index as long ago as 2008.

09.00 Good morning and welcome to live coverage of Sir Mervyn King's appearance before the House of Commons Treasury.