Labour needs new thinking

London, 13th January 2020

Positive Money response to Labour macroeconomic framework

Responding to Shadow Chancellor Anneliese Dodds’ speech on Wednesday evening outlining Labour’s macroeconomic framework, research and campaign group Positive Money has welcomed the party’s commitment not to over-rely on monetary policy, but warns that we need new thinking that matches up to the challenges we face.

Fran Boait, executive director of Positive Money, said:

“The Shadow Chancellor is right that monetary policy shouldn’t be doing all of the work in supporting the economy. We’ve seen how relying on quantitative easing alone failed to ignite a sustainable economic recovery while turbocharging inequality in the decade after the 2008 crash.

“We need new thinking that matches up to the challenges we face, from the ways in which coronavirus is reshaping our economy, to accelerating environmental breakdown. The current crisis has shown the need for greater coordination between monetary and fiscal policy, and Labour should be thinking about how the Treasury and Bank of England can work together better.

“Without direction from the Treasury, the Bank of England will continue to use blunt instruments such as quantitative easing or even negative interest rates to inflate asset prices across the board. Instead of enabling greater wealth inequality, there is huge potential for Labour to be outlining how the Bank of England’s considerable powers can be better used to support employment and a fair green transition.”

Notes

1. Positive Money campaigns for a money and banking system which supports a fair, democratic and sustainable economy. Set up in the aftermath of the financial crisis, Positive Money is a not-for-profit company funded by charitable trusts and foundations, as well as small donations from its network of over 65,000 supporters. https://positivemoney.org/

2. For more information or to arrange a briefing/interview with a spokesperson please contact press@positivemoney.org.uk or Simon Youel on 07817765517