Andrew Bailey rests between us and reckless Reeves
Andrew Bailey shut down a meeting that Rachel Reeves had attempted to procure between the Treasury, the Bank's Prudential Regulation Authority and burgeoning challenger bank, Revolut, to try to hurry the authorisation of its banking licence.
People familiar with the matter said the move to cancel the meeting was made over concerns the Bank's regulation should be independent from political interventions.
They are absolutely correct, and this flagrant attempt from Reeves to force her 'growth at all costs' agenda at the expense of independence should be admonished.
Despite its relative novelty, central bank independence is sacrosanct to the Western world. Even Donald Trump, who has persistently shown disregard for financial markets, has so far been forced to renege on his various attempts to replace the Federal Reserve chair, Jerome 'Mr Too Late' Powell, for fear of bond vigilante retribution.
Here in the UK, it was Gordon Brown who finally brought about operational independence for the Bank of England, a policy that arrived surprisingly late in 1997. Ever since, it has been one of the few sacred cows of British politics, with parliamentarians of all stripes understanding the value of a credibly independent central bank.
Given the policy's architect, it is all the more surprising that it is Rachel Reeves, who famously had a framed picture of Brown in her university bedroom, launching so many skirmishes against her former employer.
I've written recently on Reeves's susceptibility to promises of growth, but this latest personal attempt to strong-arm the regulator into rushing its processes is a worrying step. This has nothing to do with my opinion on Revolut, but it is not a good look for the Chancellor to be seen to be effectively lobbying on the behalf of a private business.
It will likely wind up an embarrassing and futile moment for Reeves, who has clearly made the move in a last-ditch effort to get Revolut to pick London when it eventually lists on a stock exchange. The bank has already expressed its preference to list in the US, with its co-founder expressing that he did not 'see the point' of listing in London.
The news comes the same month that Bailey told the Treasury Select Committee in no uncertain terms that he disagreed with Reeves's assertion that regulation is 'the boot on the neck' of business. The FT reported his opinion was a touch stronger away from the cameras, with a colleague of his saying he was 'really p----d off' over the comments.
There is certainly room for reforming the regulatory landscape in this country, but Reeves seems to be taking the Elon Musk approach of pulling out plugs and hoping it doesn't break.
Bailey is not without his faults, but currently he seems to be the only person who remembers why we put some of this regulation in place to begin with.
Another example is the huge clamour from the major UK banks to do away with ring-fencing, the regime that separates their retail operations from their investment banks.
Reeves seems once again to have listened to whatever the City says it wants, and is open to such a move. But this regulation was imposed with good reason after the global financial crisis and should not be trifled with lightly.
There may well be elements that can be improved, or even cause to scrap it, but this should be investigated from a more sensible standpoint than 'any regulation stifles growth'.
I don't envy Reeves. The country has stagnated since 2010, and has been hit with several once-in-a-generation events. At each attempt to cut spending, she has been forced into a climbdown by a fearful Sir Keir Starmer, which has forced her hand into looking for a way to improve the nation's lot elsewhere.
But while Starmer has been wrong to stand in her way on many occasions, Bailey is proving to be a rare voice of reason.
Yes, Britain is stagnating and has been for a long time. We need to spur growth in this country, and regulations from planning to finance need to be tweaked.
But tearing down the guardrails because nobody's fallen off the edge since you put them up isn't a plan for growth – it's a recipe for disaster.
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