City bosses hit out at 'illogical' Labour plans to move Bank of England to Birmingham

City grandees greeted Labour plans to uproot the Bank of England from the Square Mile and relocate it in Birmingham with bemusement today.

The proposal to turn the Old Lady of Threadneedle Street into the Old Lady of New Street after more than 300 years in the Square Mile was recommended in a report commissioned by shadow chancellor John McDonnell.

It suggested moving “some functions” of the Bank to England’s second city to create an “economic policy hub” alongside a National Infrastructure Bank and a Strategic Investment Board.

But Andrew Sentance, senior economics adviser to PwC and a former member of the Bank’s rate-setting Monetary Policy Committee, said that “there would not be any real logic” to moving policymaking outside the capital.

City commentator David Buik, of broker Panmure Gordon, said: “If you told me all the international banks and the foreign exchange markets were moving to Birmingham too then fine, but the fact remains that London is the financial hub.”

Another ex-MPC member, David Miles, said: “You can see some pretty clear advantages that the Bank should be near the headquarters of the people it regulates — and that is not Birmingham.”

The interim report, by GFC Economics and Clearpoint Corporation Management, does not specify which functions should be moved out of London. Labour declined to comment.

Mr Sentance said the Bank already had an “extremely useful” network of regional agents across the UK, although the report suggested this was “unsatisfactory”.

However, Lord Adonis, who now chairs the National Infrastructure Commission, supported the move.

He said: “Few things more important to power than where it is located. Get the Bank of England to Birmingham on the same day HS2 opens in 2026!”