City grandee Lord Turner has warned that the political risks associated with Jeremy Corbyn’s proposed “People’s Quantitative Easing” are huge.
“The technical case for treating overt money finance as an available tool – if and when the conditions makes such stimulus appropriate – is incontrovertible,” Turner said in an interview published today. “But the political risks of its misuse are huge.”
Corbyn and his recently appointed shadow chancellor of the exchequer John McDonnell have argued for a so-called people’s QE, which would allow the Bank of England to print money to fund government projects for housing, infrastructure and other public services.
But Lord Turner, who sits on the Bank of England’s Financial Policy Committee (FPC) and is the former chair of the Financial Services Authority (FSA) and director general of the Confederation of British Industry, told the Institute for Public Policy Research think tank that Corbyn’s socialist views could undermine his radical suggestions.
“Paradoxically, the governments best placed to use overt money finance without generating legitimate concerns about its misuse, and without therefore generating harmful market reactions, would be those whose overall commitment to a capitalist market economy is unquestioned,” Turner said.
He added that if Corbyn goes “too far” on progressive taxation, it would render him unelectable. In his first major speech as shadow chancellor, McDonnell is expected to address the Labour party’s annual conference in Brighton later today. Corbyn is due to deliver his own speech in Brighton tomorrow.