Labour Party likely to seek broader BoE mandate if in power
LONDON (Reuters) – Britains opposition Labour Party would likely broaden the Bank of Englands mandate to include factors such as employment but would not seek to remove the central banks independence, Labours finance policy chief John McDonnell said on Sunday.
“Im quite attracted by the wider mandate that there is in America but we would retain Bank of England independence,” McDonnell told ITVs Peston on Sunday show.
Asked whether he thought such a shift was very likely, he said “Yes, it is.”
Britain is not due to hold another national election until 2022, and is currently governed by Theresa Mays Conservatives.
The Bank of Englands interest rate-setting committee has a remit to maintain price stability and keep inflation at 2 percent, as well as supporting the governments objectives for growth and employment.
The U.S. Federal Reserve has a mandate to promote maximum employment, stable prices, and moderate long-term interest rates.
McDonnell said the party would publish its second report on the future of the Bank of England in late May or early June, and that he wanted as wide a debate as possible about what its aims should be.
Last year, Labour said it would consider moving parts of the BoE to Birmingham, in central England, if it won power, arguing such a change was needed to reduce the economys reliance on Londons banking industry.
Although Labour trails the Conservatives in most opinion polls, it is considered a viable future government given that May is undertaking a complex and divisive exit from the European Union without a parliamentary majority.
That prospect has unnerved some in the British financial services sector, who fear for the status quo as a result of the shift towards a socialist agenda undertaken by Labour since left-wing leader Jeremy Corbyn took power in 2015.
On Thursday, McDonnell, an outspoken critic of the banking system, offered Londons financial services industry a new pact, giving banks a seat at the policymaking table if Corbyn replaces May, in return for higher taxes.
Reporting by William James; Editing by Edmund Blair and Dale Hudson