POLITICIANS and not unelected officials should be responsible for making key decisions on economic and financial policies, a former senior Bank of England official argues in a report published today.
Far from improving stability in the markets, former Monetary Policy Committee member Kate Barker claims the new Financial Policy Committee will “complicate” macroeconomic management.
“The institutional arrangements for the FPC are flawed, and retain much of what proved to be a weakness of the regime introduced in 1997; the belief that responsibilities can be neatly divided up,” she argues in a report for the CentreForum think-tank.
Although the FPC hopes it can flexibly react to new developments in markets, Barker believes this lack of definition around the body’s role means it will fail to gain the confidence of markets.
Instead, she believes the Bank should advise the chancellor on major decisions, but still allow elected politicians to take the call. “Politicians should not too readily cede powers on the grounds that they themselves cannot be trusted with difficult decisions,” she said.