A British American academic who has previously researched the damage to the UK economy from austerity has been appointed to the Bank of England’s interest rate-setting committee.
Alan Taylor, a professor at New York’s Columbia University, will join the Bank’s monetary policy committee (MPC) on 2 September for a three-year term after his appointment by the chancellor, Rachel Reeves. He replaces Jonathan Haskel, who is stepping down after six years on the panel.
Born in Wakefield, Taylor has spent much of his career in the US as an academic and adviser in the finance industry, including roles with the US bank Morgan Stanley, the investment manager Pimco and consultancy firm McKinsey.
He is a research associate at the US National Bureau of Economic Research, known for its work marking the start and end dates of US recessions. He is also a research fellow at the pan-European Centre for Economic Policy Research and is already a visiting scholar at the Bank.
Taylor warned, in research published in 2013 during the early years of the Conservative-Liberal Democrat coalition government, that austerity was having a damaging impact on the UK economy.
As the former chancellor George Osborne froze public sector pay, cut back state spending, investment and welfare payments, Taylor suggested that without austerity, the UK economy would have been steadily climbing back above its pre-2008 financial crisis peak.
The research showed that GDP would have been about 3% higher without the combination of tax increases and spending cuts.
Reeves said Taylor’s “substantial experience in both the financial sector and academia will bring valuable expertise” to the Bank’s rate-setting committee. “I would also like to thank Prof Jonathan Haskel for all his work since he joined the MPC,” she added.
Andrew Bailey, the Bank’s governor, said he was pleased Taylor would join the MPC this autumn. “This is an important time for the committee and we will no doubt benefit from Alan’s contributions to our debates,” he said.
“I would like to also thank Jonathan Haskel for his service on the committee over the past six years. He will be missed,” he added.
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Earlier this month, the Bank’s nine-strong panel voted by a narrow majority of 5-4 for the first cut in interest rates since the start of the pandemic. Bailey held the casting vote, while Haskel and Huw Pill, the Bank’s chief economist, were among the minority pushing to keep borrowing costs on hold.
Financial markets expect the Bank to cut interest rates again, possibly as early as September, although City traders are betting that November is more likely after warnings from the central bank that it would not rush to cut borrowing costs too quickly.
Inflation rose for the first time this year in July, returning above the Bank’s 2% target to 2.2%, according to figures released this week. While there are signs of cooling price growth in the service sector of the economy, the UK jobs market bucked predictions of a further weakening in June – two key measures the Bank is monitoring closely before launching a second rate cut.