There has been almost universal praise for New Labour's decision in 1997 to give the Bank of England operational independence to set interest rates, thereby reducing the risk of politicians allowing their decisions to be influenced by electoral considerations. It is seen as the classic example of the new orthodoxy of depoliticisation.
Yesterday the Chancellor, Alastair Darling, came close to breaking the government's self-imposed rule on not calling for rate changes when he said the Bank's Monetary Policy Committee minutes showed 'they have got room to make reductions.' Indeed, at the same press conference, Gordon Brown came close to saying there would be a reduction on Thursday, before hastily correcting himself.
Darling's intervention was criticised by Professor William Buiter of LSE, a former member of the MPC. He said that Mr Darling should 'learn and practise the art of silence' when itr comes to rate decisions as 'it is undermining on of the crowning achievements of the Blair-Brown years.'
This is not an isolated incident as far as the Chancellor is concerned. He has also called in the energy companies to explain their price rises, effectively by-passing the energy regulator.
What this suggests is that depoliticisation is fine in benign economic conditions, but once there are problems with implications for the Government's electoral standing, repoliticisation can occur.
No comments:
Post a Comment