In a report published by the UK’s Labour Party, consultants GFC Economics recommended that parts of the Bank of England be relocated out of London to other major cities in the UK. The plan to establish the BoE in Birmingham, with offices in Belfast, Glasgow and Cardiff could mean that the second oldest central bank and the City of London would for the first time since 1734 not be the hub of finance in the UK.
According to the report investment in the UK industries from IT to manufacturing has lagged all other European countries bar one over the last 10 years, and the opposition party believes that by relocating the parts of the bank would help reverse this as well as reducing regional inequality. As John McDonnell, the shadow chancellor believes, ‘This important report drums home the message that our financial system isn’t delivering enough investment across the whole country and in the high-technology industries and firms of the future where it is needed most’ adding ‘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’.
Graham Turner, author of the report, gave a stark warning that unless the UK starts to invest, it will get left far behind, not only by Europe, but also globally. ‘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’. He goes on to say ‘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’.