Tag Archives: bank of england

Central Bank Independence

 

Support for multilevel governance seems a prerequisite for any Lib Dem. Devolution from the centre to the periphery, from Westminster to Holyrood and the Welsh Assembly is one example. There has also been devolution upwards to the supranational institutions such as the EU Statesman are no longer the preserve of government; governance is now very much a fixed concept.

However, there has been devolution or delegation to other institutions besides devolved bodies and the EU. The Bank of England’s independence is an interesting point in case. If LDV readers do support Central Bank Independence as a theoretical concept in the abstract, then its internal consistency should also have an external consistency when applied to the specific case of the Bank of England.

At this point, I would really like to start a debate on the following:

What should the size and scope of the Bank of England’s remit be?

Posted in Op-eds | Also tagged and | 5 Comments

Is evidence-based policy losing out to populism?

Populism always sounds good, but in the long-run it usually hurts those it is supposed to help.

In the UK, interest rates used regularly to be cut to stimulate an artificial boom before an election. This was good for the ruling political party, but the country paid a heavy price later. In the nineties, the Liberal Democrats championed the idea of making the Bank of England independent, and, in 1997, Labour implemented the policy.

As a result, inflation has been controlled, and business and international investors have more confidence in the UK. It’s no panacea. It didn’t stop serious mistakes being made over bank regulation. But, I think, it’s proved a real success.

In 1997, the Labour party proposed a National Minimum Wage. Many were deeply concerned that, by not allowing the existence of low paid jobs, this policy would price some low skilled workers out of the job market.

Posted in Op-eds | Also tagged , and | 58 Comments

Vince on Scottish independence: RBS would ‘inevitably’ move to London

It’s not often we hear from the Lib Dem business secretary Vince Cable on constitutional matters. But today he appeared before Parliament’s Business, Innovation and Skills Committee to discuss the implications for business of Scottish independence, ahead of September’s referendum. Here’s what he said (via the BBC):

RBS would “inevitably” move its headquarters to London if Scotland votes for independence, UK Business Secretary Vince Cable has claimed. Mr Cable told a committee of MPs that the bank would want to be based where it was “protected against the risk of collapse”. …

William Bain, Labour MP for Glasgow North East, asked

Posted in Parliament and Scotland | Also tagged , , , and | 4 Comments

Opinion: The Bank of England’s Independence – the Law

Political RavishmentAccording to the Independent, Nick Clegg wants to take on the ‘left’ in his Party.

In doing so he accuses the Social Liberal Forum’s amendments to the economics motion as “ending the Bank of England’s independence by ordering it to do more to create jobs” and “tearing up the fiscal mandate.”

Let’s deal with the first accusation. The 1998 Bank of England Act granted the Bank independence to set interest rates. That is instrument independence. However, the remit for the Bank is set by the government and so The Bank does not have goal independence, it takes its goals each Spring from the Government.

Posted in Conference and Op-eds | Also tagged and | 17 Comments

Opinion: Keep the Bank of England Independent

Conference on Monday will debate an amendment from the Social Liberal Forum (SLF) to the Economy Motion which calls the government to “monitor closely the progress of the Bank of England, ensuring it has a refocused mandate that allows monetary policy to aid growth, reduce the unemployment rate to below 6% creating at least a million jobs, and to address weak income growth, targeting a higher level of national/median income.”

Who could possibly disagree with that? Well, me for a start. In practice this is reducing the independence of the Bank of England.

Liberal Democrats have long argued that the Bank of …

Posted in Conference and Op-eds | Also tagged | 11 Comments

What Japan did while we were sleeping

"2 x inflation in 2 years, 2 x monetary base, 2 x amount bonds purchased" “2 x inflation in 2 years, 2 x monetary base, 2 x amount bonds purchased”The overnight news yesterday from the Bank of Japan spelt out its serious intent to double the monetary base – the type of monetary easing, a l’outrance, that I have been arguing for at LDV, and elsewhere, for a number of years now.

The announcement followed the declaration back in November by the then leader of Japan’s opposition that when elected he …

Posted in News | Also tagged and | 38 Comments

Opinion: Radical action need to remedy the economy’s woes

While the Chancellor’s direction of travel in relation to tackling Britain’s economic challenges is improving, his current approach will leave Britain feeling like Sisyphus, labouring hard to push a rock up a hill but never quite feeling secure that it won’t come crashing back down, destroying the hard work already undertaken.

But just as Sisyphus continued to focus on the mechanics of getting the rock up the hill, rather than indulge in any broader experiment to escape his predicament, Osborne toils at the seams of Britain’s economic malaise.

The Chancellor happily wallows in the Bank of England’s myth that giant infusions of credit from Quantitative Easing and the ‘Funding for Lending’ schemes, are any sort of remedy to Britain’s economic woes.

Posted in Op-eds | Also tagged | 16 Comments
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