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Labour have announced plans to introduce a productivity target for the Bank of England (BoE), in a major shake-up to the UK’s economic system.
Under the proposed plans, the BoE would be given the responsibility and power to boost productivity growth, in a bid to re-vitalise the economy.
This will mark the most comprehensive re-configuration of the Bank of England’s role since 1997, when Gordon Brown initated plans to establish its independence.
In a report set to be be published on Wednesday, Labour will highlight the marked slowdown of productivity in the UK.
This is to be attributed to the billions of pounds into property speculation, whilst neglecting the stimulation of new technologies in manufacturing, ICT and other growing sectors.
Should Labour win the next election, the BoE will be tasked with meeting a new annual productivity target of 3 percent.
As it stands, the Bank’s primary task is in monitoring inflation levels, ensuring they do not surpass 2 percent.
The shadow chancellor, John McDonnell is expected to outline these plans in greater detail today.
Mr McDonnell is to say of the plans:
“Our financial system right now isn’t fit for this purpose. We need one that helps to deliver enough investment in the high-technology industries and firms so that we can reboot and rebuild Britain. This report is a vital part in making this happen.”
Alongside delegating this responsibility to the central bank, Labour is also considering moving some of its operations to Birmingham whilst cooperating to a greater extent with the government in meeting a productivity target.
The proposals come amid a marked slowdown in the British economy, in particular with respect to manufacturing, in the wake of the Brexit referendum back in June 2016.
In fact, The Office for Budget Responsibility has forecasted productivity growth, which was recorded at 0.6 percent in 2017, will only reach 1.2 percent by 2022.