Adam Posen backs Ed Miliband's bank shake-up

(Reuters)

Ed Miliband's controversial plan to break up Britain's high street banks has won the backing of a former member of the Bank of England's Monetary Policy Committee.

Adam Posen, who served on the MPC between 2009 and 2012, said the Labour leader’s pledge to refer the banking sector to the competition authorities and cap the market share of individual institutions was “reasonable” and “responsible”.

Speaking at the World Economic Forum in Davos, Posen said: “I don’t know how anybody who’s pro-market can really oppose a serious competition examination of the banking system, full stop. I think it’s a perfectly reasonable thing for them to advocate. I think it’s responsible.”

Mr Miliband’s speech earlier this month received a torrid reception.

The Bank’s Governor, Mark Carney, even appeared to pour cold water on the idea when he said breaking up institutions would not necessarily lead to more competition.

But Posen said the Labour leader was actually advocating something similar to what some of the Bank’s leading lights have been pressing for in recent years.

“[Lord] King and [Andy] Haldane and [Adair] Turner and I were all there saying that pretty damn loudly for a lot of years and nothing happened so I’m perfectly happy to see Labour saying what they’re saying,” he said.

“It’s not about hating the banks, or hating the big banks,” he added. “It’s about any other critical industry in the country — you make sure there is competition and adequate provision of services”.