I remember many years ago, it must have been during the John Major premiership, when I went to a conference at the Bank of England. It was all about the benefits of independence for the Bank and it was full of the great and the good of central banking, all telling each other that independence would mean lower inflation, lower interest rates and more stability.
At the time I thought it seemed unlikely that thousands of marchers would take to the streets with banners, chanting “What do we want? Independence for the Bank of England! When do we want it? Now!” But then along came Gordon Brown and we were all shocked to discover that independence for the Bank of England had been hidden deep in the Labour Party manifesto – and it just happened.
The results were impressive, in the old days interest rate decisions and the fight against inflation were all tied up with political positioning, point scoring and electoral advantage. Now staid, boring reliable economists made the decisions, published their research and their votes and the markets loved it.
But then in 2016 I sat outside the Bank in the BBC’s radio car after the referendum result and reported on the collapse of the value of sterling, and the reassuring words of Mark Carney who pointed out that the Bank had hundreds of billions of pounds available to steady the markets if necessary. I don’t think the Brexiteers ever forgave him, especially when he later used the famous line that the UK was “dependent on the kindness of strangers”.
Which brings us to the current attacks on the Bank because of the stubbornness of inflation and the rising cost of borrowing. None of this is down to Brexit you understand, none of it is due to a weaker pound, more expensive and limited immigration, red tape and billions of pounds of added costs at the border, less competition, and less investment.
No, the higher rate of inflation here must be the fault of the Bank of England. It has failed.
It would be nice to think that this blame game had nothing to do with the fact that the Bank of England can hardly avoid pointing out that Brexit has been a dog’s dinner, but obviously it has.
The increasingly desperate cries for a new Brexit backing Governor, new Brexit supporting economists, a new pro-Brexit mandate and a new Brexit Bank of England, kind of give the game away.
Can you imagine what would happen to the pound, to interest rates and to the economy if the Bank of England was forced to pump out pro-Brexit “economic research”, and recruit only Brexit supporting economists and staff, and a Brexit backing Governor?
Market confidence would collapse overnight, along with the pound, the bond markets and the country’s credit rating. Interest rates would have to soar to protect the currency, emergency budgets would fail to reassure investors, the economy would collapse under the pressure.
You might then actually get those crowds in the streets demanding independence for the Bank of England. Independence is not perfect, but it beats the alternatives.