SMPC criticises FSA and argues for tax cuts
5 March 2012
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SMPC Chairman David B. Smith comments on the Bank of England's regulatory policy
Commenting on the minutes of the IEA’s Shadow Monetary Policy Committee, released today, the committee’s chairman, David B. Smith said:
“In the minutes of its latest poll, the IEA’s Shadow Monetary Policy Committee criticised the FSA’s hard line on bank capital regulation which, to some degree, is required by international regulatory agreements. Members argued that misguided regulatory policy was thwarting efforts by the Bank of England to loosen monetary policy through quantitative easing and therefore was reducing the supply of credit to British business at a crucial time.
“Concern was also expressed about the government’s fiscal policy ahead of the budget. In particular, it was felt that some taxes were set at rates higher than those that would produce maximum revenue because of the ‘Laffer curve effect’. As such, well designed tax cuts could actually reduce government borrowing and increase economic growth.”
Notes to editors
The full minutes are available here.
To arrange an interview about the report please contact Stephanie Lis, Director of Communications: 020 7799 8909, slis@iea.org.uk
The SMPC itself is a group of independent economists who have gathered quarterly at the Institute of Economic Affairs (IEA) since July 1997. That it is the longest established such body in Britain and meets physically to discuss the issues involved distinguishes the SMPC from the similar exercises carried out by several publications. The next SMPC minutes will be published on Sunday 1st April.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
“In the minutes of its latest poll, the IEA’s Shadow Monetary Policy Committee criticised the FSA’s hard line on bank capital regulation which, to some degree, is required by international regulatory agreements. Members argued that misguided regulatory policy was thwarting efforts by the Bank of England to loosen monetary policy through quantitative easing and therefore was reducing the supply of credit to British business at a crucial time.
“Concern was also expressed about the government’s fiscal policy ahead of the budget. In particular, it was felt that some taxes were set at rates higher than those that would produce maximum revenue because of the ‘Laffer curve effect’. As such, well designed tax cuts could actually reduce government borrowing and increase economic growth.”
Notes to editors
The full minutes are available here.
To arrange an interview about the report please contact Stephanie Lis, Director of Communications: 020 7799 8909, slis@iea.org.uk
The SMPC itself is a group of independent economists who have gathered quarterly at the Institute of Economic Affairs (IEA) since July 1997. That it is the longest established such body in Britain and meets physically to discuss the issues involved distinguishes the SMPC from the similar exercises carried out by several publications. The next SMPC minutes will be published on Sunday 1st April.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
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