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Bank of England To Anchor Economic Policy Hub in Birmingham, Says Labour

Bank of England

The policy division of the Bank of England, together with a new £250B National Investment Bank, could be moved to Birmingham to create a new economic policy hub, a Labour Party report commissioned by shadow chancellor John McDonnell recommends.

The historic relocation from London is a key part of a report prepared by GFC Economics' founder, economist Graham Turner.

The move to Birmingham would bring the bank close to the new National Investment Bank, designed to support growing businesses, and the Strategic Investment Board, intended to support new technologies. Both are also tipped for Birmingham.

The Bank of England would also re-open significant offices in devolved areas (Glasgow, Cardiff and Belfast), along with smaller regional offices in Newcastle and Plymouth.

The Curzon Street HS2 station has already been flagged as a possible location for the new policy hub, reports The Guardian.

If Labour put their plan into action it could be a turning point for Birmingham, as well as boosting infrastructure spending outside London, Colliers International chief economist Walter Boettcher said.

“It’s interesting Labour chose Birmingham, and it could impact on the pace of infrastructure development outside London. For Labour it is an easy political win, because it shows their support for the regeneration agenda, and the development agenda, and underpins their industrial strategy,” Boettcher said.

“Birmingham is accessible, and the HS2 station helps, it probably makes long-term sense to put these institutions somewhere central," he said. "But they could also have in mind the work of Mayor Andy Street’s West Midlands Funding Commission which is looking at ways to provide long-term funding because we all know central government funding will always be limited. Maybe Labour see this as something Birmingham can build on?”

The West Midlands Funding Commission is intended to support the city-region’s economic plan which will release 3,800 acres of brownfield land.

Boettcher added: “Having the Bank of England brand in Birmingham will count with overseas investors, particularly if HSBC and Deutsche Bank, in their relocations to Birmingham, bring high value jobs.”

 

Jeremy Corbyn, leader of the UK Labour Party, and John McDonnell, Shadow Chancellor
Jeremy Corbyn and John McDonnell

The Turner report adds flesh to the National Investment Bank proposal, floated by McDonnell in July 2016.

The principal funding recommendation is that the initial financing of the NIB should be via a £20B government bond issue. Subsequent annual issues, guaranteed by the UK government, would increase the size of the NIB balance sheet to approximately £250B by the end of a 10-year period.

The National Investment Bank will allocate funding to 12 regional investment banks.

“The National Investment Bank and associated regional development banks are an ambitious blueprint for providing funding on a sufficient scale to meet the needs and potential of the UK’s small and medium-sized enterprises, and by transforming the operation of the UK’s financial system through the creation of new institutions accountable to the public and wider social goals, in a sustainable, regionally-balanced and equitable way," the report said.