Burnham Team Weighs Bank of England Mandate Shift as £875 Billion QT Faces Review
Updated
Updated · The Guardian · Jul 21
Burnham Team Weighs Bank of England Mandate Shift as £875 Billion QT Faces Review
3 articles · Updated · The Guardian · Jul 21
Summary
Louise Haigh’s policy blueprint has put a rethink of the Bank of England’s inflation-only remit into play, with Andy Burnham signaling action on living costs that could involve closer Treasury-Bank coordination.
The push reflects concern that a 2% inflation target policed mainly through interest rates is ill-suited to repeated supply shocks—from Covid and Ukraine to the Iran war—because higher borrowing costs can curb growth without fixing shortages.
£875 billion of quantitative tightening is emerging as the likeliest early test: critics say bond sales add about £6 billion to this year’s deficit and may push up government borrowing costs, while Andrew Bailey has defended the approach.
Options being discussed range from a dual growth-and-inflation mandate to a Treasury-Bank coordinating committee or temporary flexibility on inflation during climate shocks, though Burnham’s camp would be wary of unsettling markets or Bank independence.