In the event of the Labour Party winning the next General Election, the Bank of England would be moved to Birmingham and given a new mandate.
Under proposals to be announced today (20 June) by John McDonnell, the party's shadow chancellor, and drafted for Labour by Graham Turner, an economist at GFC Economics, the Bank of England would be told to achieve a target of 3 per cent productivity growth.
The party would require the central bank to report after every Budget the progress made on achieving this target.
It is not clear at this point the timeframe over which the Bank of England would be expected to achieve this target.
Bank of England governor Mark Carney has previously expressed the view that it would be unwise to change the Bank's remit.
Last November, the Office for Budget Responsibility (OBR) said in a positive scenario for the UK economy, where the public finances are running a surplus, annual productivity growth could be in the region of 2 per cent.
Andy Haldane, the Bank of England's chief economist, told the Treasury select committee in February that Brexit would likely lead to a reduction in productivity growth.
This is because, he said, immigration would be lower, which would mean the size of the working age population would shrink, reducing productivity in the economy.
He added that immigrant workers tend to be more productive than native workers, so a reduction in the proportion of immigrants in the workforce, as well as a reduction in the total size of the labour force, reduces productivity.
The Institute of Economic Affairs (IEA), a think tank, said the reason one measure of UK productivity shows French workers to be more productive than those of the UK is because France has much higher unemployment than the UK.
As a result the institute points out only the most productive workers, that is those with the most up to date skills, are able to get jobs in France, while in the UK, where unemployment is lower, both the most productive and least productive workers are able to get jobs.
As a result, the institute stated this means the average worker’s productivity is statistically lower.