On Sunday, John McDonnell, the finance policy chief of the Labour Party, the opposition party of Britain, said that the party would likely broaden the mandate of the Bank of England to include various factors such as employment but would not seek to remove the independence of the central bank.
McDonnell said on ITV’s Peston on Sunday show: “I’m quite attracted by the wider mandate that there is in America, but we would retain Bank of England independence.”
When asked whether he thought that such a change was very likely, he answered: “Yes, it is.”
The United Kingdom is not scheduled to hold another national election up until 2022 and is currently governed by the Conservative party of Theresa May.
The interest rate-setting committee of the Bank of England has a remit to keep the stability of prices and maintain inflation at 2 percent, as well as to support the objectives of hte government for growth and employment.
The Federal Reserve of the United States has the mandate to encourage stable prices, maximum employment, and moderate long-term rates of interests.
McDonnell said that the party would issue its second report on the future of the Bank of England before the end of May or early June. He said that he wanted as wide a debate as possible regarding what its aims should be.
In 2017, the Labour Party said that it would consider relocating parts of the BoE to Birmingham, that is located in central England, if it obtained power, arguing that such a change was required to reduce the reliance of the economy on the banking industry of London.
Even though Labour lingers after the Conservatives in the majority of opinion polls, it is considered to be a viable future government given that Prime Minister May is tackling a complex and divisive exit from the European Union even without a parliamentary majority.
That possibility has disheartened some in the financial services sector of Britain, who are concerned for the status quo as an outcome of the shift towards a socialist agenda that is undertaken by the Labour Party since Jeremy Corbyn, the left-wing leader, took power in 2015.
Being an outspoken critic of the banking system, McDonnell offered the financial services industry a new pact on Thursday, offering banks a seat at the policymaking table if ever Corbyn takes the place of May, in return for higher taxes.