Weaponizing the Bank of England
Telling the central bank to dictate where banks can lend reeks of statism.
The masters now?
Photographer: Chris Ratcliffe/Bloomberg
The Labour Party’s plan to oblige the Bank of England to pursue a productivity target alongside its current inflation objective has been widely derided. But it has ambitions to press-gang the central bank into supporting its statist objectives that go much further, are potentially more damaging to the economy, and threaten to undermine the institution’s independence.
The party’s intentions are laid out in a report commissioned by Shadow Chancellor of the Exchequer John McDonnell and authored by Graham Turner at GFC Economics, who the Times of London has previously tipped as McDonnell’s pick for Bank of England governor. There’s real devil in the detail.