SMPC criticises FSA and argues for tax cuts

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.

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