The Labour party has in mind new institutions that will capitalise future-facing industries, create good jobs and see Britain catch up with its peers. That is one message from Rachel Reeves’s speech. Her Labour colleague John Eatwell suggests she is inspired by Alexander Gerschenkron, whose seminal work concludes that the way the state was organised influences its ability to adopt income-enhancing technologies. Many of Labour’s proposals, such as Great British Energy, are welcome. But this column has been sceptical about whether they would meet the scale of the challenges Britain faces without substantial funding or effective mechanisms for socially directing investment.
The Bank of England’s role remains particularly unsettling in shrinking the fiscal space available to ministers. Both the opposition and the government hide behind the Bank’s independence. However, MPs on the Treasury select committee raised concerns about whether it was playing a productive economic role this year. They warned that the rapid sale of bonds the Bank purchased through quantitative easing (QE) potentially had “worrying implications for public spending”.
