Bank independence

Posted on May 12, 2007
Filed Under Policy |

Writing in yesterday’s Telegraph, John Redwood attacks Brown’s policy decision to make the Bank of England independent, arguing that it is not in fact completely independent and has not resulted in low inflation nor unprecedented economic growth.

There are some truths to what Redwood says, but I think it’s also worth remembering that Brown would have had to make the Bank independent if Tony had got his way over joining the euro. The UK orginally secured an opt out from EMU in the Maastricht Treaty and if the euro was adopted then the Bank of England would have to be made independent to meet these rules.

Rather than the crowning achievement of the New Labour era, the independence of the Bank of England was part of the preparation for joining the Euroland. 

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