Jeremy Warner on the Charter, and sanctions

Two comments on this piece by Jeremy Warner in the Telegraph.  Jeremy remarks:

“there is no purpose to law without sanctions, and this one appears to have none beyond the extra capacity for embarrassment if it is broken.”

First, I suppose it’s hoped by the charter’s authors that successfully adhering to it will lower the cost of borrowing, other things equal.  So the sanction is higher taxes [fewer votes, more restless right wing MPs] for the same amount of public spending.

I’m not so sure the Charter can or will be adhered to, and whether trying might not lead to more uncertainty, rather than less, but leave that aside for the moment.

Second, the reputational costs Jeremy mentions are not to be sniffed at.  These seem to have served us reasonably well in the case of the legislation isolating the Bank of England’s monetary policy decisions from political interference.

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One Response to Jeremy Warner on the Charter, and sanctions

  1. ” These seem to have served us reasonably well in the case of the legislation isolating the Bank of England’s monetary policy decisions from political interference.”

    Tony, if you think spendng £375bn to make the rich richer, and to enable to banks to front-run the QE programme, and making huge profits on the back of it, enhanced the BoE reputation, you seem not be living in the real world.

    The BoE had of course no reputation to defend prior to that, as it was singularly unable to put a break on excessive lending practices in the run-up to 2008, while you were there.

    The BoE should of course have a reputation for the quality and effectiveness of its work, not for the fact that it is allegedly independent.

    And quality and effectiveness were definitely questionable, in the run-up to 2008, as well as since. The only thing it has is the alleged independence. Which is, rightly, subject to review. We do not want failed institutions not fit for purpose, even if independent.

    So the corollary with the Fiscal Charter, comparing it to the BoE is apt. Neither would be really “independent” , but neither would be fit for purpose!

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