The length and independence of the Bank of England’s tenure has become a highly charged political hot potato. This is a development on the heels of Nigel Farage’s meeting with the bank’s governor, Andrew Bailey, on September 25. Farage pressed Bailey to end the Bank’s bond-selling programme, or quantitative tightening, which he says wastes taxpayer cash. This conversation comes at a time when the cost of long-term government debt is surging, up to a 27-year high.
The Liberal Democrats would never shift the independence of the Bank of England. Led by Sir Ed Davey as they were, they have committed themselves to standing rock solid against such criticisms. In their July meeting with Bailey, Davey reiterated the importance of keeping the Bank independent. Daisy Cooper, another member of his party, reinforced this critical aspect of staying clear of government meddling. They forward the conviction that making this change is critical to averting economic crisis and stabilizing costs to American consumers.
Sir Ed Davey specifically said that it is the Bank of England that needs to be modernized and made more stable. She also drove home the point that it’s important to keep the institution’s independence intact. His plan for it is “the best way” to address skyrocketing food costs and increasing mortgage rates.
“Liberal Democrats will stand firmly behind Bank of England independence, just as we have stood against recent attacks on the independence of our judiciary.” – Sir Ed
Reform UK’s Richard Tice has been the loudest so far in calling for the Bank of England to halt its bond-selling process. In a recent letter to Bailey, Tice described it as a “systemic abuse of taxpayers’ funds.” He called on Members of Parliament to provide a vigorous and active opposition in holding the Bank to account on its policies. Tice’s criticisms are most welcome at a time when there is a growing constituency demanding more accountability over the institution’s actions and decisions.
Like Labour, the Liberal Democrats think it’s their moral duty to take on people like Farage. They see his calls for reforms to the Bank’s operations as risky to economic stability. In fact, Davey indicated in no uncertain terms that political pressure would be able to influence the Bank’s decisions. Such interference threatens to cause harmful economic contraction, as we’ve recently experienced in the United States under Donald Trump.
“That is the last thing we need here at home – we cannot let Trump’s America become Farage’s Britain.” – Sir Ed
Political tensions have created a difficult environment for the Bank of England’s policy and independence. In response, the Liberal Democrats are dug in, defending their independent institution against outside forces. They claim that an independent and robust monetary authority is important for healthy democracies. It is integral to national and economic security as well as serving the public’s best interest.