Mervyn King raises spectre of currency wars in 2013 The imbalance between countries such as the UK and the US which relied on consumer spending to fuel growth before 2008, and those including Germany and China that relied on exports, is seen by many economists as a key cause of the financial crisis. Since agreeing a global stimulus plan in London in 2009 in the wake of the crisis, G20 leaders "have gone backward since then and there's been no agreement on rebalancing the world economy," Sir Mervyn told an audience in New York yesterday. "The need to rebalance is not confined to those countries that had large trade deficits," said Sir Mervyn, who is stepping down next summer. The contrast between the deficit and surplus countries is one overshadowing us all. Should the failure to rebalance the global economy persist, Sir Mervyn warned that more countries will start resorting to lowering their currencies in an effort to fuel growth. In a speech to the Economics Club of New York, Sir Mervyn said that he expects US politicians to avoid sending the American economy over what has been dubbed the 'fiscal cliff' at the start of next year. The fiscal cliff is shorthand for a series of tax rises and spending cuts that are due to take effect in less than a month. Western economies also face the broader challenge of "defending the free market" as growth continues to prove disappointing, Sir Mervyn said. That will involve slowing the "march of special interests and lobbying," he said. The governor also quipped that he will not be missed at all when he leaves next summer because Mark Carney, his successor and the current Bank of Canada governor, is "young, good looking and charismatic."