The Bank of England has fired a warning shot at the Government’s call to sweep away red tape – insisting its job of preventing ‘severe disruptions’ to the economy must take priority.
Deputy governor Sam Woods wrote to Sir Keir Starmer saying that while the central bank ‘strongly supports’ the Government’s goal of economic growth and ‘encouraging responsible risk-taking’, this was not its main focus.
Woods said: ‘There is a distinction between our primary objectives, to promote safety and soundness of banks and insurers and protection for policyholders, and our secondary objectives to facilitate competition and growth.’
The head of the bank’s financial services watchdog, the Prudential Regulation Authority, added that economic instability could lead to ‘disruption to the ability of households and businesses to make transactions, manage risk and access credit’. Woods said this would amplify ‘economic shocks’ and hinder growth.
It is a pointed response to a letter sent to regulators last month by Starmer, Chancellor Rachel Reeves and Business Secretary Jonathan Reynolds encouraging watchdogs to be ‘more pro-growth and pro-investment’.
The Chancellor has backed plans to look for ways of allowing more mortgage risk-taking by lenders to make it easier for people to own their own homes. Rachel Reeves told the Financial Times she welcomed proposals from the Financial Conduct Authority to lift limits on mortgages and was ‘open to looking at ideas that can boost home ownership’.
Conflict of interests: Deputy Bank of England governor Sam Woods told Keir Starmer that delivering economic growth and ‘encouraging responsible risk-taking’, was not its main focus
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