A report commissioned by shadow chancellor John McDonnell recommends moving large parts of the Bank of England to Birmingham, Britain’s second largest city.
The report concludes that the central bank’s London base in Threadneedle Street is “unsatisfactory and leads to the regions being underweighted in policy decisions.”
A “new economic policy hub” could be created by moving the bank’s operations to the Midlands, moving some functions of the BoE “next door or close to” the National Investment Bank and Strategic Investment Board.
The report noted that investment in high-tech and other “critical sectors” in the UK is lagging behind investment in real estate companies by as much £28bn.
“As a central bank sitting at the heart of the United Kingdom financial system, the Bank of England needs to be playing an active, leading role, ensuring banks are helping United Kingdom companies to innovate”, the report said.
“There is a risk that the disproportionate number of technology companies in London and the South East will increase, exacerbating regional inequality”.
Mr McDonnell said: “Under the Tories, we’ve seen more and more investment flowing into property speculation whilst high-tech firms have been starved of the money they need, and research spending has lagged far behind.”
The recommendation is part of an interim report into the UK’s financial system, led by economist Graham Turner of GFC Economics.
Mr Turner was quoted by The Guardian as saying:
“The pace [of] automation and technological change is accelerating, threatening established business models and creating an economy characterised by frequent ‘disruptive’ episodes.
“As a central bank sitting at the heart of the UK financial system, the Bank of England needs to be playing an active, leading role, ensuring banks are helping UK companies to innovate. Flow of funds analysis shows that banks are diverting resources away from industries vital to the future of this country.
“There is a risk that the disproportionate number of technology companies in London and the south-east will increase, exacerbating regional inequality. Governments have a critical role in addressing these weaknesses, but that will require determined, strategic action.”